Key changes to Victorian taxes in 2026

The start of 2026 introduces more important changes to state taxes in Victoria, including the application of the Vacant Residential Land Tax (‘VRLT’) to certain “unimproved land” in Victoria, as well as increases to the rates charges for the Congestion Levy and Emergency Services and Volunteers Fund (“ESVF”) levy. 

These changes significantly increase the compliance burden on Victorian property owners, and many will face new obligations for the first time in 2026, highlighting the need for property owners to closely review their land tax obligations and seek expert advice where necessary. 

Key Highlights

• 2026 Land Tax Assessment are expected to be issued from late January 2026 – property owners should ensure land tax has been charged correctly on all land holdings.
• Absentee Owners were required to notify the SRO of their absentee status by 15 January 2026.
• Owners of property in Victoria which was “vacant” in 2025 will be required to notify the SRO of their property’s vacancy status by 15 February 2026.
• From 1 January 2026, VRLT will be imposed on land in Metropolitan Melbourne which has remained unimproved for a continuous period of 5 years.
• Short stay accommodation providers with booking collections of under $75,000 must submit their first annual return by 30 January.
• From 1 January 2026, owners and operators of car marks in certain inner-Melbourne suburbs will see increases of more than 73% in Congestion Levy rates for 2026.
• From 1 July 2026, the fixed charge for the ESVF levy will increase for residential and non-residential property.
• The SRO has also signalled heightened enforcement across Land Tax and VRLT in 2026, increasing the likelihood of reassessments where details are incorrect.

2026 land tax assessments

The SRO will begin issuing 2026 Land Tax Assessments from late-January, based on land held on 31 December 2025. It is important that Victorian property owners review their 2026 Land Tax Assessments to ensure the accuracy of details contained therein, and confirm that land tax has been levied correctly.  

We recommend that property owners review the following items on their 2026 Land Tax Assessment:

• Ownership: Check that the assessment is issued to you in the correct capacity. That is, whether as sole owner, joint owner, or as a trustee of a trust.
• Taxable Value: Land Tax is levied on the unimproved site value of your land. There is an opportunity to object to the valuation if you believe it does not reflect the market.
• Land Description: Check that the address, land ID and title references match those which you currently own.  For land that was sold prior to 31 December 2025, it should not be included in your 2026 assessment.
• Exemptions: if your property is eligible for an exemption (e.g. primary production land) you should explore the opportunity to apply for the exemption.
• Surcharges: if you are a foreign owner you should seek advice on whether the land you own is subject to the absentee owner surcharge.  

If you believe any of the details included in your 2026 Land Tax Assessment are incorrect (including the absence of relevant exemptions), you have 60 days from the date of issue to object to your assessment. 

VRLT on “unimproved land” from 1 January 2026

From 1 January 2026, VRLT will apply to land in Metropolitan Melbourne that is capable of residential development but has remained undeveloped for at least five years. This includes completely vacant blocks as well as land on which construction has commenced but not reached a stage of occupation. 

Importantly, the five year period is retrospective, meaning that land which has remained undeveloped since December 2020 or earlier may be subject to VRLT under these new provisions. For example, a block purchased in 2020 but still awaiting development approval could be charged with VRLT in 2026.

Commissioner’s discretion 

The Commissioner of State Revenue may exercise their discretion not to treat unimproved land as “vacant” where the owner is genuinely and actively working to commence construction on the land, and it is unreasonable to expect construction on the land to have commenced within 5 years, given the circumstances.  

Factors which are relevant to the Commissioner’s exercise of discretion include issues such as access constraints, cultural heritage findings, ecological concerns, extreme weather events, utility connection delays and planning appeals. However, broader economic conditions, labour shortages, fluctuations in the economy, supply chain challenges, changes to the design of a project and access to finance will generally not be sufficient grounds for the exercise of this discretion.

We can assist you in making the relevant application for the discretion if required. 

Other Victorian Tax Updates

Short Stay Levy Registration 

Booking platforms and owners/tenants that accepted short stay bookings in 2025 are required to register for the Short Stay Levy and lodge their first annual  return by 30 January 2026  where booking fees did not exceed $75,000.

Short stay accommodation providers who received booking fees of over $75,000 in 2025 are required to lodge quarterly, with the next return  due on 30 April 2026. 

Failure to register and pay the Short Stay Levy may result in the State Revenue Office seeking to recover any unpaid amounts of the levy, plus penalties. 

Congestion Levy 

From 1 January 2026, the Congestion Levy  will extend to capture  off-street parking spaces in Melbourne’s inner-eastern suburbs, including Cremorne, Richmond, South Yarra, and Windsor.

The relevant Congestion Levy rates have also increased by more than 73% across both Category 1 (Melbourne, Port Phillip and Yarra Councils) and Category 2 (Darebin, Melbourne, Merri-bek, Port Phillip, Stonnington and Yarra), highlighting the importance of car park owners and operators seeking relevant exemptions or concessions.

Emergency Services and Volunteers Fund Levy 

From 1 July 2026, the fixed charge component for the ESVF levy will increase for both residential and non-residential property.

Non-residential land such as commercial, industrial and primary production land will see an increase in the ESVF levy fixed charge from $267 to $275 per annum, while residential land which is not used an the owner’s principal place of residence (such as investment properties and holiday homes) will see an increase in the from $132 to $136 per annum.

What does this mean for property owners in Victoria?

Victorian property owners are advised to carefully review of how their properties were used throughout 2025 to determine whether any VRLT, Land Tax or Short Stay Levy obligations may arise in 2026. 

Owners should ensure they meet their notification, registration and lodgement obligations, including:

• Confirming all details in their 2026 Land Tax Assessment and lodging objections within 60 days if inaccuracies exist.
• Lodging VRLT vacancy notifications by 15 February 2026 where required.
• Registering for and lodging Short Stay Levy returns if booking thresholds were met.
• Considering exemptions or concessions for the Congestion Levy, particularly given the substantial rate increases.

A heavy focus of the SRO’s 2026 compliance program will be placed on identifying incorrect Land Tax exemptions (particularly PPR and primary production), trustee and absentee owner land holdings, and vacant residential properties where owners have failed to lodge required notifications or have incorrectly claimed the holiday home exemption. Clients should therefore expect greater scrutiny across all areas of Victorian taxes, combined with an increased likelihood of reassessments, penalties and audit activity by the SRO.

How RSM Australia can help

RSM Australia’s State Taxes and Indirect Tax specialists have extensive experience advising clients on their state tax obligations having assisted in the review of assessments, lodgement of objections, managing notifications, applying for exemptions and concessions, and ensuring ongoing compliance with state tax legislation.

If you believe you may be affected by the 2026 changes, or require support navigating your Victorian state tax obligations, please contact a member of RSM Australia’s Indirect Tax team for tailored assistance.