Once upon a time, the Victorian state budget was often a non-event for advisors and investors alike, with minor tweaks around the edges each year as the state regularly booked surpluses because of stamp duty revenues from booming property prices.

In the post-pandemic world, however, the tax settings of the individual Australian states have become just as important as when the Federal budget is announced each year, none more so than in Victoria where a combination of government support during the pandemic and an ambitious infrastructure program has left the state coffers in a position not experienced since the 1990’s. For small business accountants and their clients, understanding these taxes is crucial.

Victorian state taxes encompass a wide range of levies, including land tax, payroll tax, stamp duty, motor vehicle taxes, congestion levies, and gambling taxes. These taxes are administered by the State Revenue Office (SRO) of Victoria, which ensures compliance and efficient collection of revenue. This article will provide a comprehensive guide to the current key taxes Victorian small businesses should know about. LDB Group’s tax consulting services can help you navigate these complexities.

Land tax: What small businesses need to know

Land tax is imposed on the unimproved value of land owned by individuals and entities, excluding the principal place of residence. Other exemptions include land on which primary production activities are undertaken as well as specific exemptions with respect to land held by charitable and not for profit organisations. While this tax primarily affects landowners, it can impact small businesses that own commercial property.

As of May 2025, the land tax thresholds and rates are as follows:

• Land value up to $50,000: Exempt
• Land value between $50,001 and $100,000: $500
• Land value between $100,001 and $300,000: $975
• Land value between $300,001 and $600,000: $1,350 plus 0.3% of the value over $300,000
• Land value between $600,001 and $1,000,000: $2,250 plus 0.6% of the value over $600,000
• Land value between $1,000,001 and $1,800,000: $4,650 plus 0.9% of the value over $1,000,000
• Land value between $1,800,000 and $3,000,000: $11,850 plus 1.65% of the value over $1,800,000
• Land value over $3,000,001: $31,650 plus 2.65% of the value over $3,000,000

Note that land holdings under discretionary trust entities are subject to an additional surcharge so before purchasing land holdings in such an entity the additional cost over time must be weighed with the potential benefits of using that ownership structure. Note that land holdings of greater than $3,000,000 under trust structures in effect do not have a surcharge. Small business accountants should advise their clients on these implications.

Also note that there are also additional 3% surcharge for “absentee owners” of land in Victoria. An absentee owner is an individual who is not an Australian citizen or permanent resident, does not ordinarily reside in Australia and was absent from Australia for greater than 6 months in the proceeding year (or was absent on 31 December of the year prior). This surcharge also extends to company and trusts controlled or set up outside of Australia.

Vacant residential land tax (VRLT)

This tax is often confused with the ordinary land tax outlined above but is in fact a separate item in its own right. The aim of this tax is to prevent otherwise liveable residential properties from remaining vacant or underutilised. While less directly relevant to most small businesses, it’s important for property tax accountants and advisors to be aware of.

Originally only affecting inner urban properties, as of 1 January 2025 it has been extended state wide.

The first step in determining whether this affects a property is to review a residential property’s usage in the previous 12 months. If greater than six months of that period the property was vacant then the property may need to be assessed for VRLT.

Note that exemptions exist for certain Local Government Areas in the alpine regions of the state as well as an exemption for properties occupied at least 28 days during the proceeding year for the purposes of use as a holiday home.

In the absence of obtaining an exemption, VRLT is charged on a progressive scale as follows:

• 1% of the Capital Improved Value of the land for the first year the land is liable for VRLT;
• 2% of the Capital Improved Value of the land for the second consecutive year;
• 3% of the Capital Improved Value of the land for the third consecutive year onwards.

Payroll tax in Victoria: A guide for employers

Payroll tax is levied on employers based on the total remuneration paid to their employees. From July 2025, the payroll tax rate in Victoria is 4.85% for businesses with annual remuneration exceeding $1,000,000. Tax is only payable on the amount in excess of this threshold. This is a key consideration for small business owners and their accountants.

Small businesses with wages below this threshold are exempt from payroll tax, promoting growth and employment in the sector. Additionally, regional businesses benefit from a reduced payroll tax rate of 3.65%, incentivizing economic activity and job creation in non-metropolitan areas. Business tax advisors can help companies optimize their payroll tax obligations.

Land transfer (stamp) duty: Implications for businesses

Stamp duty is a tax on certain transactions, particularly property transfers. The rates for stamp duty are as follows:

• Dutiable value between $0 and $25,000: 1.4% of the dutiable value
• Dutiable value between $25,001 and $130,000: $350 plus 2.4% of the dutiable value in excess of $25,000
• Dutiable value between $130,001 and $960,000: $2,870 plus 6% of the dutiable value in excess of $130,000
• Dutiable value between $960,001 and $2,000,000: 5.5% of the dutiable value
• Dutiable value greater than $2,000,000: $110,000 plus 6.5% of the dutiable value in excess of $2,000,000.

Note that there are concessional rates or exemptions for first-time buyers of principal places of residence. Conversely, foreign purchasers are subject to an additional duty of 8% on top of the ordinary rates above.

Also note that as of 1 July 2024, any purchase of commercial or industrial properties will be subject to an annual property tax rather than stamp duty going forward. This phase-out will occur over a 10-year period, so specific advice about the implications should be sought prior to the purchase of such a property. This is particularly relevant for businesses investing in commercial real estate, and tax accounting service providers should be aware of these changes.

Other Victorian taxes and levies

This article won’t go into deep detail, but other levies to be aware of include congestion levies charged on properties in the inner urban metropolitan area, the fire services property levy on all properties collected via local council rates, and the Victorian short stay levy which we have written about previously with respect to owners of properties rented under short term arrangements, often via booking platforms.

Need tax consulting for your small business?

At LDB Group, we understand that navigating both Federal and State government tax systems can be daunting. Our team of small business accountants and tax consultants is ready to ease this burden and support you with tax advice, tax planning, business services, and wealth management strategies.

LDB Group, with our unique service offering covering tax accounting service, superannuation, wealth solutions and property management expertise, can be a valuable resource to you and your business.

If you require any assistance from experienced business tax advisors, simply call us on 03 9875 2900 or submit your enquiry through the contact form on this page.