A property investor in Victoria owns multiple investment properties with a combined site value exceeding the land tax threshold. The investor restructures ownership by transferring properties into separate discretionary trusts. Under Victorian land tax law, what is the consequence of this strategy?
Correct Answer
A) Trust land is taxed at surcharge rates with a lower threshold, so total land tax may rise.
In Victoria, land held on trust, including in discretionary trusts, is generally taxed at trust surcharge rates, which have a lower tax-free threshold and higher rates than the general scale. Splitting a portfolio across several discretionary trusts therefore does not create extra general thresholds and can increase total land tax. Limited exceptions, such as a nominated beneficiary for some discretionary trusts, need specialist advice.
Why This Is the Correct Answer
Victorian trust land is generally assessed on the trust surcharge scale, which has a lower threshold and higher rates than the general scale. Moving investment properties into discretionary trusts does not multiply the general threshold and may increase total land tax.
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