Commercial and Industrial Property Tax Reform (CIPT)

What is the tax reform scheme?

The Commercial and Industrial Property Tax Reform Act 2024 came into effect on 1 July 2024. This reform is abolishing stamp duty on commercial and industrial properties and replacing it with an annual tax based on unimproved land value.

The new tax system applies to commercial and industrial property transactions with both a contract and settlement date on or after 1 July 2024. For these properties stamp duty will be paid one final time on the property when it is transacted after 1 July 2024 and the new Commercial and Industrial Property Tax (CIPT) will be payable 10 years after the final stamp duty payment, regardless of whether that property has been transacted again. It is important to note that land may also be brought into the scheme through land consolidations or subdivisions.

When does land have a qualifying use?

Land can only be entered into and remain within the tax reform scheme if it has a qualifying use. Qualifying use means land that been allocated an Australian Valuation Property Classification Code (AVPCC) by the Valuer General in the following ranges:

1. 200-299 (Commercial); or
2. 300-399 (Industrial); or
3. 400-499 (Extractive Industries); or
4. 600-699 (Infrastructure and Utilities)

AVPCC should typically be displayed on the property’s Council Rates Notice or on future Land Tax Notices.

What is the rate of CIPT?

CIPT is intended to apply annually at a rate of 1% of the site value (also known as the unimproved vale) of the land. CIPT will be payable in addition to land tax. The owner of the land is liable for CIPT and any unpaid CIPT will be a charge on land.

Transition Loans Program

The final duty liability is to be paid as an upfront lump sum or certain eligible transactions and purchasers it can instead be paid through annual instalments over a 10 year period through a transitional loan facilitated by the Treasury Corporation of Victoria.

If you would like more information regarding CIPT or would like our assistance in selling or purchasing commercial or industrial property, please contact our office on 03 9707 1155.