iscoverAs the new year continues to creep closer, Victorian landowners are being reminded to be wary of incoming requirements and changes to the Victorian vacant residential land tax.
Victorian landowners to gear up for 2026 land tax changes
21 November 2025
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9 minute read
New, unimproved land provisions are set to commence on 1 January 2026, and although existing Victorian vacant residential land tax (VRLT) rules will continue to apply, reviews need to be made to stay ahead of the curve.
Ahead of the new rules coming into play, Irina Tan, partner at Pitcher Partners, issued a timely reminder to ensure both the existing and new VRLT rules are complied with.
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From 1 January 2026, unimproved land provisions will apply for the first time based on land held during 2025 and earlier.
Tan said under these provisions, the five-year clock would not “start ticking” now, as land held since December 2020 or earlier could be subject to VRLT and land zoned as an urban growth zone would be excluded from unimproved land provisions.
It was noted that the Commissioner of State Revenue would be able to exercise a discretion not to treat land as vacant under the unimproved land provisions where construction had not commenced for acceptable reasons.
In addition to this, in considering whether to exercise the discretion, the Commissioner would have to have regard to guidelines issued by the Treasurer under the relevant legislation.
“These guidelines have just been issued by the Treasurer on 17 November 2025 and broadly provide that the following factors will be considered in the determination as to whether a residence is to be constructed and whether there is an unacceptable reason for construction not having been commenced within five years.”
Reasons deemed acceptable included extreme weather events causing damage, unforeseen restrictions, inadequate infrastructure, prolonged or significant planned appeals, availability of specific key expertise or personnel, as well as other unforeseen and exceptional circumstances beyond the control of the owner or developer.
Tan said the late release of these guidelines shortly before the unimproved land provisions came into play, was “disappointing” as it “deprives various stakeholders of adequate opportunity to consider, plan and position themselves taking into account the Treasurer’s guidelines mandated by legislation”.
The guidelines were also dubbed as concerning based on falling short of providing meaningful utility to landowners, as broader economic conditions such as labour shortages, economic fluctuations and supply chain issues would not generally support the exercise of the discretion.
“The guidelines appear to disregard the practical realities of large-scale land development, which often occur in multiple stages to ensure feasibility,” she said.
“The guidelines also appear internally inconsistent. While they state that unimproved land will only be considered not vacant if the owner is “genuinely and actively working to commence construction on the land as soon as possible, and could not reasonably be expected to have commenced construction within five years,” in most cases construction cannot commence within five years due to a combination of factors, including those the guidelines generally exclude from supporting the exercise of discretion.”
Tan said those affected by the new changes, looking to gain the Commissioner’s discretion, would need to notify the State Revenue Office and apply for the discretion by the 15 January deadline, until the legislation was passed.
“Landowners should urgently review their position if they have not done so already. Due to the severely limited nature of the scope of factors indicated by the relevant Treasurer guidelines just issued in respect of the unimproved land provisions, it is vital for landowners of land potentially caught by these provisions to consider their position and next steps,” Tan said.
“Failure to comply can result in significant penalty tax and increased scrutiny by the Commissioner of State Revenue going forward.”
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