All land is taxable in Victoria unless an exemption applies.

As a charitable institution, you may be entitled to apply for a charitable land tax exemption pursuant to Section 74 of the Land Tax Act 2005 (Vic).

To gain an exemption, land is “exempt land” if it is:

1. used and occupied by a charitable institution exclusively for charitable purposes; or
2. if it is owned by a charitable institution; and vacant and declared by its owner to be held for future use; and occupied by a charitable institution exclusively for charitable purposes or it is owned by a charitable institution and leased for outdoor sporting, outdoor recreational, outdoor cultural activities; and available for use for one or more of those activities by the members of the public.

Whether an organisation is a ‘charity’ is determined by principles established at common law.

Generally, an organisation is considered a charitable institution if it established for either the relief of poverty; the advancement of education; the advancement of religion, or other purposes beneficial to the community.

Charitable institutions that have previously been exempt from land tax have recently been notified by the state regulator that they are now liable to pay land tax, unless an exemption applies. Often Land Tax will now apply where a charitable institution either operates an opportunity or other retail shop, hires out their church halls to third parties, or leases land not for outdoor sporting, recreational, cultural, or similar activities.

For example, if a charitable institution leases a church hall to a commercial entity, it will not qualify for the land tax charity exemption. Whereas if the hall was leased to another charitable institution and that institution uses and occupies that land exclusively for charitable purposes, it may qualify for the land tax charity exemption.

Therefore, the relevant land must be, or be declared to be, used and occupied by a charity exclusively for charitable purpose.

Applying for land tax exemption through the State Revenue Office of Victoria can be a complex and technical process. We have successfully assisted numerous non-profit charitable organisations in obtaining land tax exemptions.

If you have any questions or require legal advice about this topic, please contact Ita Wong Ita.Wong@lewisholdway.com.au or Paul Holdway PaulH@lewisholdway.com.au