Land tax and charities in the State election

Changes made to the Victorian land tax laws in December last year potentially have significant implications for non-profit entities and should be on the radar of charities as we vote in the State election this week.

What is the problem?

Prior to December 2021, the charitable land tax exemption simply required land to be used by (or held for future use by) a charitable institution exclusively for charitable purposes.

In December 2021, the Land Tax Act was amended to add a requirement for the land to be used and occupied by a charitable institution for charitable purposes in order to qualify for the exemption.

The addition of the “occupation requirement” has significant consequences for churches and other charitable organisations who allow community groups and other members of their communities to use the charity’s facilities on an informal or casual basis.

On the strict wording of the legislation, unless the user is themselves a charitable organisation, hiring activities may trigger a liability for land tax on part or all of a charity’s property.

We are seeing some concerning results for our clients:

  • A church assessed for land tax on the basis that it allowed its hall to be used by a children’s playgroup and for ad-hoc hire by individuals and a community group.
  • Another church assessed for land tax due to a solitary hire of a meeting space to a non-charity during the relevant year.

Most charities want to benefit their local community, but some are understandably nervous about hiring their facilities to others – an undesirable outcome both socially and economically.

What is Moores doing?

Moores has been actively involved in advocating for change in this area of the law. We have made submissions to both the current Government and the Opposition.

What are the major parties saying?

Current Labor Treasurer, The Hon Tim Pallas MP, has advised that the Department of Treasury and Finance is undertaking a review into the application of the charitable land tax exemption. The Treasurer is willing to accept submissions in that regard.

The Liberal Opposition has announced they intend to revisit the charitable land tax exemption should they win this weekend’s election. Subsequent Liberal press releases have stated an intention to do away with land tax on charities who hire out their facilities for community use.

Regardless of which party is successful this weekend, Moores is hopeful that the matter of land tax on charities will be on the agenda for change when Parliament recommences.

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