Victorian Commercial and Industrial Property Tax -

Victoria’s new Commercial and Industrial Property Tax

Author: Ita Wong

The Commercial and Industrial Property Tax Reform Act 2024 received Royal Assent in May 2024.

From 1 July 2024, commercial and industrial properties will transition to the new system as they are sold.

Land transfer duty on commercial and industrial properties in Victoria (more commonly known as stamp duty) will be abolished and replaced with the new commercial and industrial property tax (CIPT). The CIPT is calculated at 1% of the land’s site value (unimproved value of the property) and will apply annually.

A 10-year transition period will commence after the first eligible transaction of a commercial or industrial property on or after 1 July 2024. After the 10-year transition period, the property will enter into the new tax system and become liable for CIPT.

The CIPT is separate from and in addition to the existing land tax system.

To determine if a property will have a qualifying commercial or industrial use, refer to the Australian Valuation Property Classification Code (AVPCC) by the Valuer General. The AVPCC can also be found on a local council’s rates notice.

The AVPCC codes are:

200-299 (commercial),

300-399 (industrial),

400-499 (extractive industries) or

600-699 (infrastructure and utilities – industrial).

The CIPT does not apply to commercial and industrial property agreements with a contract date before 1 July 2024. Properties primarily used for residential purposes, community centres, primary production or sports are excluded from the new regime.

If you are planning to purchase or invest in commercial or industrial land in Victoria, you may be affected by the CIPT and should be aware of the transition arrangements that apply to specific agreements entered into on or after 1 July 2024.

It would be prudent to seek legal advice before negotiating transaction documents dealing in shares or units in a landholder to ensure you are aware of the impact of the CIPT and relevant duty risks.

It is expected that the Victorian Department of Treasury and Department will announce amendments to clear up any inconsistency following the introduction of this new legislation.

Lewis Holdway Lawyers provides legal advice in relation to commercial transactions and stamp duty. Contact Ita Wong ita.wong@lewisholdway.com.au or John Wardlaw johnw@lewisholdway.com.au if you have any questions about this topic.