Rating and Taxation

Question 1

What is not rateable land? (S.154 Local Government Act 1989)

Answer 1

Crown land
Land used for charitable purposes
Land used for religious purposes
Land used exclusively for mining purposes
Land used for RSL or Airforce

Question 2

What is the site value?

Answer 2

Vacant market value of land unencumbered by any lease, mortgage or charge

Question 3

What is the capital improved value?

Answer 3

Market value of the property unencumbered by any lease, mortgage or charge

Question 4

What is the estimated annual value?

Answer 4

The gross rental which the land would be expected to be leased for from year to year, minus outgoings except council rates (net + council rates)

Question 5

What is the net annual value?

Answer 5

Whichever is greater of 5% of CIV or the EAV

Question 6

What is the date that the rating valuations are done?

Answer 6

They are as at 1st January each year

Question 7

How are non-conforming uses asses when it comes to rating and taxation vals? Eg. industrial factory in residential zone

Answer 7

The site value will be assessed as residential land

Question 8

What is a supplementary valuation?

Answer 8

It is an updated valuation of a property for rating purposes whos valuation was previously set at the relevant date.

Question 9

What are the reasons for supplementary valuations

Answer 9

Whenever something is triggered, a supplementary valuation will take place (change in zonings, building permits):
- Land that should be included is not (subdivision, consolidation)
- Valuation is altered by the approval of a planning scheme
- Value altered through physical changes to improvements

Question 10

What are the grounds for objection?

Answer 10

Value is too low or too high
Apportionment of interest or valuation is incorrect
Lands that should have been included together have been done seperate
Lands that should been seperate have been done together
Wrong person named on the notice
Area, dimensions, or description is incorrect

Question 11

Objection process

Answer 11

Objector to lodge objection within 2 months
Authority valuer has 4 months to either agree or disagree and recommend to VG
The VG within 2 months shall serve notice as to whether they agree or disagree
If VG disagrees, objector has 1 month to say they want to take it to VCAT

Question 12

What are the recent 4 legislative changes regarding tax?

Answer 12

Land Tax threshold lowered
Commercial stamp duty moving to a yearly tax
Windfall Gains Tax - Uplift from rezoning
Vacant Land Tax - has been around but now more widespread

Soon to come - tax on development sites unoccupied for a few years

Question 13

What was the Ararat Windfarm Case?

Answer 13

Chattels vs Fixtures - court of appeals upheld decision that the wind turbines would not be included as fixtures to the land.

Question 14

How would you determine the site value of a heritage property?

Answer 14

Look at HBU first - what are the restrictions
Where possible find comparable properties
Refer to cases

Question 15

What is the GPO case ?

Answer 15

Determined that SV was $1 of a heritage property because the land could only be used for the heritage restriction, after deducting cost to construct from the CIV it was left with a $1 SV (or nominal amount)

Question 16

Why is NAV different to real market rent?

Answer 16

NAV is higher of 5% of CIV or EAV - these are also based on 1st January as per usual. The EAV is also done on the gross rent minus allowable outgoings (council rates & sinking fund), or with net rent plus council rates. In the market council rates is often recoverable and therefore this represents a different amount

Question 17

What is the tax amount for windfall gains?

Answer 17

62.5% for value uplift between $100k-$500k and over $500k is 50% of uplift.

Question 18

You are approached by someone who wants to object to their land tax. What do you do, what do you tell them?

Answer 18

Firstly i would want to know why they want to object and see whether this is a ground for objection. Once we have established that i would want to perform a valuation to see whether this actually exists. (Land tax is done on the site value given from the ratings calculation but is given December 30). Then we would proceed to lodge an application for objection and it must be within 60 days of receiving the assessment.

Question 19

How is the site value for a strata retail shop calculated?

Answer 19

We cant do a site value just by comparison, as a strata property forms a larger part of the whole parent development. Therefore, in ratings and taxation, we find out the eav of the strata property, and find out the eav of the whole development. This then gives us a percentage to use. Once we have this we adopt a site value for the entire development and use the percentage to calculate the site value of the strata premises.

Question 20

Land tax thresholds?

Answer 20

Starts at $50,000 - $100,000 = $500
$100,000 - $300,000 = $975
$300,000 - $600,000 = $1350 + 0.3% over $300k
$600,000 - $1m = $2250 + 0.6% over $600k
$1m - $1.8m = $4650 + 0.9% over $1m
$1.8m - $3m = $11,850 + 1.65% over $1.8m
$3m+ = $31,650 + 2.65% over $3m

Question 21

15 Year Rule for Site Value?

Answer 21

When an owner has improved the land at their own, for instance farmers adding in drainage and filling, this will not be counted in the site value for 15 years. Things such as drainage and filling, removal of trees or removal of sand, rock, stone etc. when done at owners cost.

Question 22

What date is Land Tax Calculated at?

Answer 22

Its whoever legally owns the property on 31st december and its based on the site value of the prior year

Question 23

What are the important parts of valuation of land act?

Answer 23

Section 5a - valuing a property
Supplementary valuations
Fire services levy
Windfall gains tax
Objections
Definitions

Question 24

What can trigger a supplementary valuation?

Answer 24

Change of occupancy (commercial), subdivision of land, something being built. something being demolished

Question 25

On what basis are ratings assessments handed out? For eastland example, it has one title?

Answer 25

Ratings assessments are done on each occupancy. Therefore something like eastland may have 300 occupants who would all receive a rating assessment.

Question 26

What are the Valuation Best Practice Guidelines?

Answer 26

They are guidelines for the numerous valuers who perform valuations on behalf of the VGV in regards to rating and taxation.

Question 27

How big does a property have to be before it triggers Windfall Gains Tax? How is windfall gains tax valued?

Answer 27

Above 2 hectares
Valued using a before and after approach based on when the property was pre and post rezoning