The *Commercial and Industrial Property Tax Reform Act 2024* introduced a staged change to the way qualifying commercial and industrial land is taxed. A qualifying property generally enters the scheme through an eligible dutiable transaction or landholder transaction on or after 1 July 2024. The transaction must meet statutory requirements, including requirements relating to the property's use and the interest acquired. Some exempt or concessional transactions do not cause the property to enter the scheme.
Land transfer duty is generally payable on the entry transaction. Once the property has entered the scheme, later qualifying transactions may receive a duty exemption while the property continues to have a qualifying commercial or industrial use. After the 10-year transition period, annual CIPT may apply. The general rate is 1% of the property's site value, with special rules for eligible build-to-rent properties and exemptions.
CIPT is separate from land tax, and both may be relevant. The scheme's effect depends on the property's statutory classification, ownership and transaction history. A buyer should obtain the relevant State Revenue Office information and confirm whether the land has entered the reform, when its transition period began, whether a duty exemption may apply to the proposed transaction, and whether the property's use after settlement could affect the outcome.
The commercial lease also needs to be considered separately. Do not assume that a tax or ownership cost can automatically be recovered from a tenant. Recovery depends on the applicable legislation, the type of lease and the lease terms.
CMK Legal's property and conveyancing team can help with this.
Confirm the property's CIPT status before agreeing the price. The key question is not simply whether the land is commercial or industrial, but whether it has entered the reform and whether it will retain a qualifying use.
Law referenced: *Commercial and Industrial Property Tax Reform Act 2024* (Vic); *Duties Act 2000* (Vic). Current official guidance: https://www.sro.vic.gov.au/businesses-and-organisations/commercial-and-industrial-property-tax/understanding-commercial-and-industrial-property-tax