Commercial and Industrial Property Tax Reform

The Victorian Government is progressively abolishing stamp duty (land transfer duty) on commercial and industrial property and replacing it with an annual property tax known as the ‘Commercial and Industrial Property Tax’ (CIPT).

Further information on the CIPT is available on the State Revenue Office website.

From 1 July 2024, eligible first purchasers of a commercial or industrial property entering the reform have the option of accessing a government transition loan on commercial terms to finance the final upfront stamp duty liability on their purchase.

The transition loan will be issued by Treasury Corporation of Victoria on commercial terms, including a fixed market-based interest rate. The interest rate will be equal to a base rate (based on government borrowing costs) plus a risk margin determined annually by the Treasurer (set at 2.25 per cent for 2024-25). Annual repayments over 10 years will be set upfront to provide borrowers with certainty and the loan will be secured by a first ranking statutory charge on the land being purchased.

Further information on the key design elements of the government-facilitated transition loan is provided below, including an illustrative interest rate.

Commercial and Industrial Property Tax Reform – Transition Loan Design Elements Fact Sheet (PDF 214 KB)

Commercial and Industrial Property Tax Reform – Transition Loan Design Elements Fact Sheet (WORD 147 KB)

A summary of the key terms of the Transition Loan are set out below.  Purchasers should read the full terms and conditions carefully before deciding to apply for a Transition Loan.

Further information on the key terms of the Transition Loan Agreement is provided below.

Transition Loan Agreement - Summary of Key Terms (PDF 145 KB)

Term

Summary key terms

Lender

Treasury Corporation of Victoria (TCV).

Loan Amount

Eligible applicants can apply for a loan equal to or less than the amount of stamp duty payable on the purchase of an eligible property.

The loan amount will not exceed $1.93 million.

There is no minimum loan value.

Interest Rate

The interest rate will be fixed for the life of the loan and will be equal to a base rate (based on government borrowing costs) plus a risk margin determined annually by the Treasurer (set at 2.25 per cent for 2024-25), provided the repayments are made annually in accordance with the terms of the Transition Loan.

Loan Term

10 years.

Interest Only

No.

Redraw

No.

Secured

Yes, by a first ranking statutory charge.

Payment Frequency

Annual.

Repayment Instalments

10 equal annual payments (of interest and principal) to repay the loan in full.

Application Fee

Nil.

A Transition Loan may only be provided by TCV under the Transition Loan Program where the applicant is an “Eligible Applicant” and the property being transacted is an “Eligible Property”.

Applications must meet the following eligibility criteria to obtain a Transition Loan.

Category

Eligibility criteria

Eligible Applicant

An applicant is an Eligible Applicant if:

a) the applicant is either –

  1. an Australian business (organisation, company, trustee on behalf of a trust or other body or entity or partnership but excluding a self-managed superannuation fund); or

  2. a natural person who is at least the age of 18 at the time of settlement and an Australian citizen or permanent Australian resident (as long as the natural person will not use the property for predominantly personal, domestic or household purposes, including residential property investment); and

b) the applicant is the first purchaser acquiring property which satisfies the Eligible Property criteria and –

  1. settlement for that property occurs in relation to a contract entered into on or after 1 July 2024; and

  2. that transaction incurs a positive dutiable transaction and is not one of the following land transfer duty events:

(1)  landholder duty;

(2)  duty on economic entitlement arrangements in relation to land;

(3)  duty on long-term lease arrangements; or

(4)  duty on changes in beneficial ownership; and

c) the applicant has received finance approval on the property in question from an Approved Lender*, which is as follows:

  1. an ADI regulated by the Australian Prudential Regulatory Authority (APRA), excluding ‘restricted ADIs’ and ‘providers of purchased payment facilities’ as those terms are defined by APRA; or

  2. another lender holding an Australian Credit Licence issued by the Australian Securities and Investments Commission and listed by APRA as a ‘registered financial corporation’; and

d) the applicant has not engaged in any Prohibited Activities (and the applicant must provide to TCV an attestation confirming that they have not engaged in any of the following events), which are as follows:

  1. activities that are illegal under Australian law;

  2. being placed, or notice has been given that they will be placed, under external administration;

  3. being the subject to a petition for bankruptcy or to wind up, dissolve or deregister a company or business;

  4. being or becoming deregistered or unregistered (including cancellation or lapse in registration or any relevant permit); and/or

  5. being subject to material adverse findings by a Federal or State government agency or local council regarding their business, activities or operations.

* Applicants will be required to provide to TCV all documentation provided to obtain finance approval on the property in question from their Approved Lender.

Eligible Property

The property is an Eligible Property if:

a)    the property has a qualifying use, meaning –

  1. it has an Australian Valuation Property Classification Code (AVPCC) of 200-499 or 600-699; or

  2. it is used solely or primarily for eligible student accommodation, being residential premises that are –

(1) designed for occupation by students of a higher education provider;

(2) occupied or available for occupation by students of a higher education provider; and

(3) commercial residential premises within the meaning of section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth); or

iii. if it has been allocated more than one AVPCC, its sole or primary use has been determined by the Commissioner for State Revenue to be within APVCC 200-499 or 600-699, which should be verified with the State Revenue Office by TCV before providing final approval for a transition loan application; and

b)    it is owner-occupied or investor-owned; and

c)     it is on a title(s) in the Land Use Victoria Register; and

d)    the sale price of the property is no more than $30 million, and incurs a maximum of $1.93 million in land transfer duty; and

e)     it has not previously been the subject of a Transition Loan; and

f)        it is not already within the tax reform scheme under the CIPT Act at the time the application is made.

Other requirements

Multiple owners of the property are able to jointly apply and be jointly responsible for repaying the transition loan.

The applicant enters into a Loan Agreement with TCV on standard (non­-negotiable) terms and conditions.

If the applicant is:

a)    an individual;

b)    strata corporation;

c)     a trust and an individual is a trustee of that trust; or

d)    a partnership and an individual is a partner of that partnership,

confirmation will be required as part of the application process that the property will not be used wholly or predominantly for residential or residential investment purposes.

TCV will undertake a credit assessment to assess the applicant’s capacity to repay the loan in accordance with its credit policy.

 

Credit Assessment

Once an application has been successfully lodged, TCV will undertake a credit assessment to determine an applicant's ability to meet the obligations of the Transition Loan.

Specifically, the following credit metric is required to be met for an applicant to be approved for a Transition Loan.

  • Loan to Value Ratio to not exceed 75%.

Where the LVR = Total interest-bearing indebtedness of the Eligible Applicant (including the Transition Loan) / Eligible Property Value on a standalone basis.

This credit metric is an input to the credit assessment process and is not the sole determinant of an applicant’s eligibility. TCV will additionally undertake an assessment of an applicant's ability to service the Transition Loan throughout the life of the loan.

TCV reserves the right to vary these metrics at any time.

To ensure your application has addressed all the necessary requirements, please make sure that:

To begin your application for a Transition Loan, click on the button below.

Apply now

Once you have submitted your application and all required documents, we will start assessing your application and contact you if anything further is required for us to consider your application. If you have any questions when completing the application online, or require any assistance, please contact us on 1300 659 430 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

You can also view answers to Frequently Asked Questions about the transition loan.

Here’s the rundown of the TCV loan application process – and how we can work together to get your loan application submitted.

1. Submit your application

After you submit your completed application, we check if all necessary information and documents have been provided. We will contact you if anything is missing.

2. Your application is assessed

Your application will be assessed in according with the eligibility criteria and credit criteria.

Please allow sufficient time for your application to be assessed in advance of the proposed settlement of your property purchase.

3. Decision and documentation

If your application is approved, we will prepare documents for signing including the Loan Agreement and a Direct Debit Agreement in relation to payments of the annual instalments.

4. Settlement

We will arrange settlement with the solicitor / conveyancer acting for you on the property purchase. This will require us to participate in the settlement of the property purchase (in PEXA), as the loan amount will be paid at settlement.

TCV will have a first ranking statutory charge in relation to your property, under section 36S(1) of the Treasury Corporation of Victoria Act 1992 (Vic).  This charge will be recorded on your property following settlement. Further information regarding the statutory charge can be found in the Frequently Asked Questions section.

There are a number of documents you will need to provide to support your application, depending on whether you are an individual or non-individual application, such as:

Document

All   Applicants

Individual Applicant (Not Self-Employed)

Individual Applicant (Sole Trader)

Non-Individual   Applicant*

Contract of Sale for subject property.

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Property Clearance Certificate (PCC) for subject property. The PCC will usually be attached to the S32 Statement, or you can apply for a PCC HERE.

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Proof of finance approval from an Approved Lender**.

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All documentation provided to the Approved Lender** for the purpose of obtaining credit approval for a loan to be used for the purpose of acquiring the property.

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Proof of identity (Your photo ID - Front and back of your driver license, or the photo page of your passport).

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Copy of your Equifax credit report (no older than 30 days). You can obtain a copy of your Equifax credit report from HERE.  Instructions on how to obtain a copy of your Equifax credit report are HERE.

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Proof of PAYG Income (Last two payslips. Payslips must be consecutive with the most recent dated no more than 4 weeks before the application date).

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Other Income (Rental Income, Other acceptable forms of income).

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Financial history (2 years’ audited financials).

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Trust Deed (applicable for Trust Applicant/s).

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*  Where a non-individual applicant has a parent company, trustee, partner, company director or secretary, those parties will also be required to provide the documents applicable to that applicant type as set out in the table.

**  We recommend you advise your Approved Lender that you are applying for a TCV Transition Loan.

Individuals will also need to read and sign a Privacy Consent Form when submitting an application. You can download the Form from the link below:

Privacy Consent Form (PDF 158 KB)

If you have any questions when completing the application online, or require any assistance, please contact us on 1300 659 430 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

You will receive an email from us to inform you that your loan has been formally approved.

Your loan documents will then be prepared by our solicitors, and you will receive an email request for you to review and sign your loan documents.

Once the loan documents have been completed, our team will advise you via email when a settlement date has been booked.

On the day of settlement, you will receive an email from our team advising you of your fixed loan rate and the annual payment amount.

We will also be in contact post settlement with a welcome call to assist you with any questions you may have with your loan.

If you have questions in relation to your loan application assessment, please contact us via email at This email address is being protected from spambots. You need JavaScript enabled to view it. or call us on 1300 659 430.

Once your loan has settled, you will receive a welcome call and letter with from our team who will assist with access to the online portal if required.

You can also reach out to us at This email address is being protected from spambots. You need JavaScript enabled to view it. or call 1300 659 430 once your loan has settled and our team can assist with your enquiry.

The following fees and charges are payable by you if and when the service is provided, the expense is incurred, or the relevant event occurs, unless otherwise specified.

 Fee

When is the fee payable

Amount

Base arrears administration fee

(Initial 30 days)

  • Payable if arrears are equal to or greater than $100.

  • This fee is debited to your loan account shortly after your monthly repayment was due, but all or any part (in excess of $100) remains unpaid.

  • This fee is in addition to our right to charge the default rate of interest and any other fee applicable on default, including the default notice fee.

$50.00

Serious arrears administration fee

(Greater than 30 days)

 

  • Payable if arrears are equal to or greater than $100.

  • This fee is debited to your loan account shortly after your monthly repayment was due, but all or any part (in excess of $100) remains unpaid.

  • This fee is in addition to our right to charge the default rate of interest and any other fee applicable on default, including the default notice fee.

$100.00

Dishonour fee

  • Payable whenever a payment to us under your direct debit authority or by any other method is dishonoured.

$5.00

Third-party administration fee

  • Fee for dealing with a third-party matter.

  • Third-party costs are costs reasonably incurred by us in providing the service and include such costs as legal costs, document custodian charges, land registry fees, any type of security registration fees, and electronic processing fees.

$50.00

Default notice fee

  • Payable to cover our costs associated with reviewing your loan account, considering our approach and issuing any default notice.

$350.00

Land Use Victoria fees

  • Payable to record the statutory charge.

  • Payable to remove the statutory charge.

$108.60

PEXA fees

  • Payable to record the statutory charge.

$68.64

  • Payable to remove the statutory charge.

$50.71

The fees can also be viewed HERE.

Contact us

For further information on the transition loan and help with your application:

Call us on 1300 659 430 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Complaints

You can contact our Customer Resolutions Team to help with your complaint:

Call us on 1300 659 430 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Further information on how you can make a complaint in relation to the Transition Loan program, and how we may handle your complaint, can be found here: Complaints Policy

Where can I find the AVPCC for the subject property?

Each separate occupancy on a property is allocated an Australian Valuation Property Classification Code (AVPCC) under the Valuation of Land Act 1960 (Vic). The AVPCC is displayed on the council rates valuation notice for the property.

The AVPCC can also be found on the Property Clearance Certificate (PCC) for the subject property. The PCC will usually be attached to the S32 Statement, or you can apply for a PCC HERE.

What is a first ranking statutory charge?

TCV will record a statutory charge over the transition loan land. This charge will give TCV a first ranking security interest in your interest in the transition loan land, to secure any amounts you owe under a transition loan agreement (including principal, interest and costs associated with your obligations under the transition loan agreement).

The transition loan will be registered on title and prioritised ahead of all other encumbrances.

Can I prepay my Transition Loan?

Yes. You may, at any time, make voluntary prepayments of the Transition Loan either in full or in part, subject to a minimum prepayment of $10,000.

While early prepayment is permitted, a break cost or benefit may apply. If you are considering making a prepayment, you will need to provide us with a notice of your intention to do so, and we will let you know the effect of the proposed prepayment. You can then decide whether or not to proceed with the prepayment.

What happens if I have difficulty making my Transition Loan repayments?

We understand that from time to time, you may experience financial difficulty. If you find yourself in this situation, please contact our Customer Assistance Team to explore available options on 1300 659 430 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Can the term of my Transition Loan be extended beyond 10 years?

Solutions for customers experiencing financial difficulty may include repayment holidays. TCV is unable to considers requests to extend the term of your Transition Loan beyond its initial ten-year term.

Is my bank an Approved Lender?

To confirm whether your lender is an Approved Lender, please check the following resources:

  • For a list of authorised deposit-taking institutions (ADIs) regulated by the Australian APRA, excluding ‘restricted ADIs’ and ‘providers of purchased payment facilities’ – refer to Register of authorised deposit-taking institutions | APRA.
  • For a list of other lenders holding an Australian Credit Licence issued by the Australian Securities and Investments Commission and listed by APRA as a ‘registered financial corporation’:

What is an indicative interest rate and how will I be advised of my final interest rate?

The interest rate on the Transition Loan will be fixed on the date of drawdown. If you are approved for a Transition Loan, your loan documents will include an indicative interest rate. On the date that your property purchase is scheduled to occur, we will send you an email notifying you of the interest rate that will apply to your loan.

How do I obtain my Equifax credit report?

Instructions on how to obtain a copy of your Equifax credit report are HERE.