On 13 December 2024, the Victorian Government announced a substantial increase (between 100% to 190%, depending in the type of land involved) and other changes to the Fire Services Property Levy (FSPL).
All property owners in Victoria are required to pay this levy apart from certain exemptions and concessions.
Rename the levy
The current FSPL is to be renamed to the Emergency Services and Volunteers Fund (ESVF) from 1 July 2025. This renaming reflects the additional services proposed to be covered, including Triple Zero Victoria, the State Control Centre, Emergency Management Victoria, and Forest Fire Management Victoria. The levy also funds the Fire Recovery Victoria, the Country Fire Authority and Fire Rescue Victoria.
Calculating the levy
There is a fixed amount and a variable rate involved in calculating the levy each year.
The fixed amount for residential property will increase, in line with CPI for Melbourne, from $132 to $136. For other types of land, the fixed rate will rise from $267 to $276 between the 2024-25 and 2025-26 period, eg, commercial or industrial land will be $276 plus the variable rate from 1 July 2025.
The variable rate will undergo a substantial increase. The variable rate is calculated as a prescribed cent value per $1,000 of the property’s Capital Improved Value (CIV).
From 1 July 2025 this prescribed variable rate will increase as follows:
- Residential and non-residential principal places of residence — from 8.7 to 17.3 cents (around a 99% increase).
- Commercial land — from 66.4 to 133 cents (around a 100% increase).
- Industrial land — from 81.1 to 133 cents (around a 64% increase).
- Primary production land — from 28.7 to 83 (around a 189% increase).
The Department of Treasury and Finance (DTF) has calculated that the median ESVF liability will rise from $191 to $254 for PPRs, from $748 to $1,240 for commercial land and from $859 to $1,247 for industrial land as a result of the increased variable rates. The median ESVF for primary producers will increase from $621 to $1,299 (around a 109% increase).
Table 1, below, summarises the median increase in the levy for the different categories of property as calculated by the DTF. The median values of each type of property was not provided by the DTF.
Estimated increases are substantial
While the median increases reported by DTF above are substantial, the estimates below show that some will incur massive increases with some farmers paying more than 170% on their levy for 2025-26 as compared to their 2024-25 levy.
Table 2, below, summarises the increase in the levy for the different categories of property based on different values to show the amount of levy payable as the value of the property increases. Table 2 shows the estimated levy (both the fixed and variable levy) for a $1 million, $2 million, $5 million, $8 million and $10 million property of each category. For example, a farmer with $2 million of land will have a 130% increase in 2025-26 compared to their 2024-25 levy and if a farmer has a $5 million farm, they will have a 160% increase in the levy in 2025-26.
Exemptions
From 1 July 2025 there is an exemption from the levy for active volunteers and life members for emergency services volunteers. This exemption will only be available for an individual’s primary place of residence (such as a house or farm). This is designed to encourage more Victorians to volunteer to provide emergency services.
Farmers with multiple properties that operate as a single enterprise may also be eligible to pay a single fixed charge under the single farming enterprise exemption.
Holders of pensioner concession cards and Department of Veterans’ Affairs Gold Cards will be entitled to a $50 concession on their levy, claimable once per property per year.
Conclusion
Many are reviewing their property investments in Victoria given recent tax increases and the introduction of a range of new taxes including the Vacant Residential Land Tax (VRLT), the short stay levy and an increase in other property costs. In some cases, clients are finding the net rent does not even cover the tax payable even where there is no interest payable on loans.Naturally, DBA Lawyers would be pleased to assist with legal and tax related advice.
Related articles:
- ESVF news by DTF
- Do you know about all these Victorian taxes?
- Victoria’s new short stay levy
- DBA Lawyers Tax Services
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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]), Shaun Backhaus, Director ([email protected]) and Nick Walker, Lawyer ([email protected]), DBA Lawyers.
DBA LAWYERS
14 January 2024
