The implications of Malcolm on Land Tax Joint Assessment

The case of Malcolm v Commissioner of State Revenue [2025] VCAT 218 examined the application of key land tax provisions for joint landowners in Victoria. The decision clarified the position that when two taxpayers jointly own multiple parcels of land, the properties will be aggregated for land tax purposes. The progressive land tax rates will only be applied once, based on the total value of the jointly owned land.

Legislation

Under the Land Tax Act 2005 (Vic) (Act), joint owners of taxable land are assessed together as if the land were owned by a single individual, per subsection 38(2) of the Act. Each co-owner is then assessed separately for their share of the land’s value, and any additional land they hold individually. A credit is applied for their share of land tax paid in respect to the joint assessment.

Background

Mr and Mrs Malcolm jointly owned two properties in Victoria. They received a 2023 land tax assessment that combined both properties under one assessment, meaning they could not claim the tax-free threshold nor progressive tax rates for each individual property.

Additionally, Mrs Malcolm owned further properties in Victoria and received an individual land tax assessment, with a credit for her portion of the tax paid on the joint holdings.

The Malcolms disputed this, arguing that subsection 38(2) of the Act required separate assessments for each property, rather than a combined assessment for all joint holdings. They contended that if the properties were individually owned, the total land tax burden would be lower, as both parties would qualify for the tax-free threshold and benefit from the shade-in rates.

They also noted that if a minimal share in the properties were transferred to a third party, the properties could be assessed separately, leading to a lower overall land tax assessment.

The Decision

The Victorian Civil and Administrative Tribunal, Senior Member R Tang AM, upheld the State Revenue Office’s (SRO) decision to deny the objection. The ruling emphasised the requirements of the Act, specifically subsection 36(1) of the Act, which mandates that taxpayers are assessed on the total taxable value of all taxable land they own as of midnight on 31 December of the preceding year.

Given that subsection 38(2) of the Act provides that joint landowners are to be assessed together as though the land were owned by a single person, this provision necessitated the combined assessment for all jointly owned properties.

Key Takeaways

While the decision itself may not be surprising given the clarity of the legislation, it highlights the complexities of land tax assessments for joint owners. The case also underscores the increasing number of taxpayers challenging land tax assessments, especially with the recent lowering of land tax thresholds and the SRO’s more aggressive stance on enforcement.

Land tax has often been overlooked in the structuring of land purchases, but with the growing significance of these tax obligations, it is now an important factor to consider before acquiring property, especially within a family group. Prospective buyers should carefully evaluate the land tax implications when deciding who will hold ownership to avoid unexpected surprises when future land tax assessments are issued.

Please contact us for advice on land tax or any State Tax issues.

Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal

Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal

Tayla Berger
Senior Associate
T: 03 5226 8559 | M: 0407 825 365
E: tberger@ha.legal

Madeline Thompson
Law Clerk
mthompson@ha.legal