Heritage tax dodges

By Meg Hill

Owners of state-listed heritage buildings in the CBD triggered a tax loophole earlier this year and escaped hundreds of thousands of dollars in land tax. Now, a bid to drag local heritage overlay into the loophole could cause an inundation of new tax dodges. 

Owners of the former London and Lancashire building at 400-402 Collins Street are attempting to join the ranks of the General Post Office (GPO), the Block Arcade and others in having their building’s land valuation dropped to just $1. 

The landlords of those heritage listed buildings, worth tens of millions of dollars, had them valued at next-to-nothing by first applying for a demolition permit. 

When the permits were refused due to the heritage listing, it allowed owners to trigger Section 2(8) of the Valuation of Land Act 1960 and have the property value dropped. 

Now, a demolition application for the London and Lancashire building is attempting to do the same under the local heritage overlay and the related Section 2(9) of the Act.

The first of the state-listed buildings, the GPO, was sent to VCAT where the loophole was confirmed. VCAT deputy president Mark Dwyer and senior member Justin Jacano called s2(8) “anachronistic”.

But the City of Melbourne’s chair of heritage Cr Rohan Leppert said the state-listed heritage buildings were a “drop in the ocean” compared to buildings in local heritage overlays that could be caught up in the loophole. 

“It comes down to a question of fairness,” Cr Leppert said. “It’s not sustainable to have owners of heritage buildings removing their land tax obligations one-by-one – it just rewards those with the wherewithal to go through a planning application refusal and revaluation process, which is hardly equitable.”

“The treasurer needs to act quickly to amend the law, so that the state isn’t minimising land tax receipts from wealthier land owners and burdening municipal planning departments with make-work planning applications.” 

The demolition application stated that the Former London and Lancashire building, built in 1865, was “no longer fit for purpose” and should be replaced by a modern, mixed-use building.

But the intention to use the application in an objection to land tax was confirmed in a follow-up email to the City of Melbourne. 

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