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1

define stat val

a statutory valuation is made under the provisions of enabling legislation and sets out requirements under which valuation is made and includes the purposes for which it may be used. Statutory valuations are used for revenue generation purposes by applicable authorities

2

major legislation

In Victoria, the enabling legislation is the Valuation of Land Act 1960.

The Act outlines a framework for making, issuing and returning valuations.

3

define market value

The estimated amount as asset should exchenage on the date of valuation between willing buyer and a willing seller after proper marketing, wherein the parties acted knowledgably, prudently and without compulsion”

4

3 types of tax

• Federal: (not directly a property tax)
o Income Tax – gains from your investments are added to your income.
o Capital Gains Tax – sell a capital asset e.g. shares / property. Difference between what is cost and sold for
o GST

• State & Territories Tax (directly a property tax)
o Land Tax
o Stamp Duty
o Fire Services Levy
o Vacant Residential Land Tax

• Local Government (directly a property Tax)
o Municipal Rates
o Fire Services Levy

5

explain capital gains tax

o Actually part of income tax, not a separate tax
o Difference between cost of acquiring a capital asset (shares / property) and what you receive when disposing of it
o If you sell your proerpty for a gain this is added to your assessable income and may increase the tax you need to pay
o Introduced 20 September 1985*
o Personal assets such as your home are generally exempt unless used to rune a business or it exceeds 2 hectares of land.

6

explain GST in relation to commercial spaces

• GST in generally applicable to the sale of commercial premises such as shops, offices factories etc unless sold as a going concern (business operating to make a profit i.e. tenant paying rent)

7

explain GST in relation to residential property

o GST treatment depends on whether it is a new residential premises, existing residential premises or a mixed use premises.
o GST is applicable to the sale of new residential premises
o GST does not apply to sale of existing residential premises
o If a premises are used for both residential and commercial purposes GST may apply (mixed supply).



8

GST in relation to farmland

o When you sell farmland it is GST-free if both:
o the land was used for a farming business for at least five years immediately before the sale
o the buyer intends to use it for a farming business

9

what is going concern and how is it related to GST?

o A going concern is a business that functions without the intention or threat of liquidation for the foreseeable future
o A sale of a going concern is GST-free if, in general, all of the conditions are met.
o Property that is part of a sale of a going concern can include:
o Premises sold together with the business
o A fully tenanted building where the property and all leases, agreements and covenants are included in the sale

10

what is stamp duty and what does it depend on

o Land transfer duty (stamp duty) is payable on the transfer of the land from one individual to another

o The amount of duty depends on the:
1. value of the property
2. what you will use it for
3. If you’re a foreign purchaser
4. And if your entitled to any exemptions or concessions (e.g. first home buyers)

11

what is land tax and how is it calculated?

o Land tax is an annual tax levied on the owners of land in Victoria on December 31

What is land tax calculated on?
o Calculated on the sit value of all taxable land owned on 31 December each year
o The SRO use the site value prepared by the Valuer – General Victoria

12

when is 'land tax' payable

o You pay land tax if the total taxable value of all the Victorian land you own (excluding exempt land), individually or jointly, as at 31 December, is equal to or exceeds $250,000 ($25,000 for trusts).

o The rate of tax you pay depends on the total taxable value of all your taxable land (i.e sliding scale, the more you have the higher the rate

13

what land is taxed and what lad is exempt

What land is taxed?
You may have to pay land tax if you own, either individually or with others, any of the following in Victoria:
1. Investment properties, including residential rental properties.
2. Commercial properties such as retail shops, office premises and factories.
3. Holiday homes.
4. Vacant land.

When is Land tax exempt?
Does not apply to exempt land such as:
Principal place of residence
You farm – primary production land
Rooming houses and charitable institutions

14

explain the fire services levy

o The Fire Services Levy (FSL) was implemented following the Bushfire Royal Commission in 2010
o The FSL helps fund the services provided by the Metropolitan Fire Brigade (MBF) and Country Fire Authority (CFA).
o It is collected by local councils and usually appears on rates notices.
o The levy is collected from non-rateable properties via a separate notice.
o Councils collect the levy, which they pass on to the Victorian Government.
o The levy comprises two parts:
➢ a fixed charge, and
➢ a variable rate based on the property's:
1. location,
2. classification, and
3. capital improved value.
4. The levy is calculated using the following formula:
Fixed charge + (variable rate x capital improved value ) – concession (if eligible) = Levy

15

Explain the case 'Spencer v The Commonwealth (1907)

The Commonwealth compulsory acquired land for a fort in North Freemantle

“What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but 'not desiring to sell?”

Isaacs J subsequently expanded on the concept:

… to arrive at the value of the land at that date, we have … to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration.
We must further suppose both to be perfectly acquainted with the land and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood as then appearing to persons best capable of forming an opinion, of a rise or fall for what reasons so ever in the amount which one would otherwise be willing to fix as to the value of the property.

Defines: Market value accepted for Statutory purposes and for most other purposes is that authoritatively formulated by the High Court of Australia (1907)

The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein each party had acted knowledgeably, prudently and without compulsion

Refer to Week 1 Reading – Spencer Case