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August 09 Edition Cover

Vacant property tax doubts

05 Dec 2017

Vacant property tax doubts Image

By Sunny Liu

The State Government wants to charge owners’ tax on the 2500 empty residential properties within the City of Melbourne but is vague about how it arrived at that number.

From January 1, Vacant Residential Property Tax (VRPT) will see owners charged an annual 1 per cent rate on their property’s capital improvement value if no one lives in the property for more than six months in a year.

The State Revenue Office (SRO) claims more than 2500 properties within the City of Melbourne sit empty, the highest number among the 16 inner Melbourne suburbs “audited”.

The auditing process relies primarily on self-reporting by property owners.

Treasurer Tim Pallas’ media advisor Elliot Giakalis would not give details about how data was collected for fear that property owners might find loopholes to avoid paying tax.

“We can’t disclose how it’s all done. Because people will be able to get around that,” he said. “The SRO checks this quite closely.”

From January 15, owners will need to report their own properties to the SRO via an online portal and penalties will apply for non-compliance.

Mr Giakalis said the SRO “engaged in investigations, field visits and other audits, IT-assisted research, risk analysis, data matching and data mining” to detect non-compliance.

But the reliability and accuracy of such measures remains ambiguous.

It is unclear exactly which “government and non-government entities” provide information about the usage and tenancy of a property.

The government is also unable to provide a data breakdown for suburbs within a municipality.

Another State Government spokesperson said the 2500 number was “just an estimate”.

Shadow Treasurer Michael O’Brien said the VRPT scheme could be based on inaccurate data.

“The SRO has no way of knowing how many nights a property is occupied. Unless Daniel Andrews expects Victorians to prove to bureaucrats where they sleep, this tax will only hit honest people who try to do the right thing,” he said.

“Many people will not be willing to tell tax officers where they sleep or how often they sleep there – but this is what Daniel Andrews now demands.”

“This new tax is poorly thought out and another broken Labor promise,” Mr O’Brien said.

Premier Daniel Andrews said: “While in the first instance this will be a self-reporting tax, there are opportunities through utilities data and other data for us to check on compliance.”

Holiday homes, city apartments used for work purposes and new residential properties will be exempted.

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