We previously reported on the Victorian Government’s Fire Services Property Levy (Levy) (as introduced under the Fire Services Property Levy Act 2012 (Vic) (Act)) which is set to replace the current fire services insurance based levy. All property owners will contribute to the provision of Victoria’s fire services under the new Levy on an annual basis unless the land is specifically exempt.
In our previous article of 23 April 20131, we noted that the Victorian Government was yet to release the rates for the variable component of the Levy. Earlier this month, the Government released the levy rates for the 2013-2014 year.
Overview of Levy rates
The Levy will comprise a fixed component and a variable component. The fixed component will be $200 for non-residential properties and $100 for residential properties and will be indexed annually by CPI.
The variable component will be calculated as a percentage of the capital improved value of the land. The Levy rates for the 2013 - 2014 year have now been released and vary depending on the location of the property (i.e. if it is located in the metropolitan fire district or in the country area of Victoria) and the property type (such as residential, commercial, industrial, primary production, public benefit and vacant land).
The variable component Levy rates for the 2013 – 2014 year have been set as follows:
Click here to view table.
Accordingly, a property owner of commercial property with a capital improved value of $50 million in the metropolitan fire district could expect to pay approximately $30,550 per annum (comprising $30,350 variable component and $200 fixed component). For the same property located in the country area of Victoria, a property owner could expect to pay $54,800 per annum (comprising $54,600 variable component and $200 fixed component).
The setting of a maximum Levy amount is at the Minister’s discretion. As at 8 May 2013 the Minister had not published a maximum amount.
Timing and collection
The intention is that this Levy will replace the current insurance based levy.
Until 1 July 2013, Victorian businesses pay GST and stamp duty in addition to the fire services insurance levy. This ‘tax on tax’ will no longer be recovered by the Levy.
The current insurance levy will be payable until 1 July 2013. An independent Fire Services Levy Monitor will oversee the transition to ensure insurers pass on the abolition of the insurance based levy.2
The Levy will take effect from July 2013. Local councils will be responsible for collecting the Levy on behalf of the Victorian Government. Payments will be due at the same time as rates payments as part of the rates notice. The Levy is a charge which runs with the land. Unpaid Levy amounts or interest accrued on the unpaid Levy will be the responsibility of the owner of the land.
As previously advised, after 1 July 2013, Buyers and Sellers of property in Victoria will need to adjust for the Levy.
In addition, it is prudent at this time to review outgoings clauses in lease contracts to determine whether these costs can be passed through to tenants and to negotiate new leases in light of these changes.