Hughes v Commissioner of State Revenue [2026] VCAT 806 (Hughes) is the Victorian Civil and Administrative Tribunal’s (Tribunal) first decision on the VRLT holiday home exemption (HHE) under section 88A of the Land Tax Act 2005 (Vic) (LTA). This decision provides useful guidance on how vacant residential land tax (VRLT) operates in practice.
Are you affected?
VRLT applies to all residential properties in Victoria. Accordingly, the Hughes decision may be relevant for you if you own residential property in Victoria that:
- is not your principal place of residence;
- may be used as a holiday home but not necessarily in line with the HHE as it is defined in the LTA; or
- you are holding on to it while you decide whether to sell, renovate or rent it out.
If your residential property is vacant, you are required to notify the Victorian State Revenue Office (SRO). Failure to do so may attract penalty tax.
Hughes decision
The facts
Mr and Ms Hughes lived in a terrace house in Carlton North since 2003. They also owned an apartment in Carlton, about 2km away, which they did not rent out and claimed it was used as a holiday home, valuing its city views and the close proximity to Melbourne’s CBD. Mrs Hughes stated that one of ‘the benefits of the Carlton Apartment over a holiday home on the Mornington Peninsula, how staying at the apartment made her and Mr Hughes feel (‘like we are on a holiday’), …’.
In 2019, they notified the SRO that the apartment had been vacant over six months of the previous year and claimed the HHE. The Commissioner refused the exemption and assessed VRLT for the 2020 and 2022 to 2024 years.
What is a holiday home?
For the HHE to apply, during each calendar year, the owner had to use and occupy other land in Australia as their principal place of residence as well as use and occupy the property as a holiday home for at least 4 weeks. In making its determination, the Commissioner must consider the location of the property, its distance from the owner’s principal place of residence and the nature and frequency of its use.
The Tribunal stated that the meaning of a statutory provision is determined by reference to its text, in the light of its context and purpose. As the term ‘holiday home’ is not defined in the LTA, it should be taken to be used in its ordinary sense, and therefore assistance may be obtained by referring to the dictionary definitions. The Tribunal accepted the SRO’s definition of the term ‘holiday house’ as defined in the Macquarie Dictionary as:
a house on the beach or at some other holiday centre, and used mainly during annual holidays, sometimes rented out for the remainder of the year.
The Tribunal also referred to the definition of ‘holiday house’ in the Oxford English Dictionary that was broader and not limited to a house in a holiday centre or use mainly during annual holidays, but rather by reference to use while on holiday:
Originally: a house used as a residence during holidays from military duty, school, etc. Later: a house used as a residence while on holiday, esp. by its owner as a second home.
The Tribunal also referred to the Oxford English Dictionary definition of ‘holiday’ that defines this by reference to a day, including ‘a day dedicated to leisure or recreation’ and a period of time other than (and typically longer than) a day, as:
period of rest or leisure; (later) esp. a time or period when a person does not work, go to school, perform his or her normal duties, etc.; time off. Later also: a time or period spent away from home or travelling as a form of leisure or recreation; a journey or excursion undertaken during such a period.
The Tribunal then noted that dictionaries are not a substitute for the ordinary process of statutory construction, taking into account the broader context of the relevant provision and applied the criteria in the HHE in s 88A of the LTA to the facts involved.
The Tribunal emphasised that the key question is not whether the property is a ‘holiday home’, rather, whether it was used and occupied as one. Accordingly, when considering the Commissioner’s decision, the Tribunal provided the following points (see paragraphs 10(c)(i)–(iii)):
(i) The requirement to consider the location of the land involves a consideration of the locational attributes. In this case, the location of the Carlton Apartment supports the finding of use and occupation as a holiday home. However, it is still necessary to consider the other matters.
(ii) The requirement to consider the location of the land involves a consideration of the locational attributes. In this case, the location of the Carlton Apartment supports the finding of use and occupation as a holiday home. However, it is still necessary to consider the other matters.
(iii) The requirement to consider the location of the land involves a consideration of the locational attributes. In this case, the location of the Carlton Apartment supports the finding of use and occupation as a holiday home. However, it is still necessary to consider the other matters.
Evidence
The Tribunal found that the taxpayer’s evidence was insufficient to claim the HHE. Mr and Mrs Hughes relied on utility bills, a logbook prepared by Mr Hughes, and Mrs Hughes recollection, but Mrs Hughes could not recall what she did on any of the logged dates nor were there any documents to corroborate the use of the property on the particular dates.
Further, the utility bills did not indicate who used the property, nor how it was used or how often; they were equally consistent with it being rented out. Without dated photographs, receipts, bank statements or other contemporaneous documents to corroborate their use, the Tribunal was not satisfied that the Hughes’ discharged their onus of proof.
Outcome
The Tribunal found that the taxpayer’s evidence was insufficient to claim the HHE. Mr and Mrs Hughes relied on utility bills, a logbook prepared by Mr Hughes, and Mrs Hughes recollection, but Mrs Hughes could not recall what she did on any of the logged dates nor were there any documents to corroborate the use of the property on the particular dates.
Further, the utility bills did not indicate who used the property, nor how it was used or how often; they were equally consistent with it being rented out. Without dated photographs, receipts, bank statements or other contemporaneous documents to corroborate their use, the Tribunal was not satisfied that the Hughes’ discharged their onus of proof.
Conclusion
The Hughes decision highlights that the onus falls on the owner (taxpayer) to make out their case, and that evidence is key. Retaining sufficient records each year for at least a 4-week period to support the HHE is recommended.
If you own residential property in Victoria that is not your principal place of residence and you are considering claiming an exemption from VRLT, or have received an SRO enquiry or assessment, we would be pleased to assist.
Related articles
- Do you know about all of these Victorian taxes?
- Victoria’s vacant residential land tax – holiday home exemption
- VRLT — holiday home exemption extended to discretionary trusts and certain other structures
- VRLT — when should you notify the SRO?
* * *
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licenced financial adviser under the Corporations Act 2001 (Cth).
Note: DBA Lawyers presents monthly online SMSF training. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.
For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.
By Daniel Butler, Director ([email protected]) and Nick Walker, Lawyer, ([email protected].
DBA LAWYERS
21 October 2026
