No clarity from ATO yet on how vacant homes tax will be imposed

The budget announcement of taxing vacant homes as a measure to free up housing stock is still unclear, with the tax office unable to provide any guidelines on how it will implement it. 

Treasurer Scott Morrison said during the budget presentation that the measure “is intended to encourage foreign owners of residential property to make their properties available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in”.

The federal government is only expecting to tax 1,000 vacant foreign-owned properties in 2019-20 – for a total $5 million in revenue.

The new charge is expected to bring in $16.3 million over the forward estimates being monitored by the Australian Tax Office, but with few details on its implementation.

There is a  Victorian tax set for introduction too, which will be self-reporting. 

The vacancy tax in Melbourne will be at 1 percent, multiplied by the capital improved value of the taxable property. 

The new tax is expected to raise about $80 million over four years.

Victoria say it will rely on self reporting with owners will be expected to inform the State Revenue Office when their property becomes vacant.

Owners of vacant homes will have to pay least $5000 in the Federal Government tax.

But the ATO said it couldn't yet provide any details on how it will determine whether dwellings are left unoccupied and out of the rental market for six months or more out of every year, as this would be contained in legislation that had not yet passed through parliament, The Australian Financial Review reported.

"Unfortunately we are unable to answer your question as the government announcement is yet to be legislated," an ATO spokeswoman was quoted as saying by the AFR.

A federal treasury spokeswoman was cited by the AFR as saying the department was working on the rules.

"The government is developing legislation as a matter of priority and anticipates that it will be introduced into Parliament later this year," she said.

"The measure is not about raising revenue, but ensuring vacant properties are released into the market both now and into the future."

Housing think tank Prosper Australia says electricity meters could be used to track occupancy, but it would be costly to administer.

According to a study by Prosper Australia last year, more than 82,700 residential properties — or 4.8 percent of Melbourne’s housing stock — sit empty.

But if the new regimes are pursued, foreign owners of vacant properties in Victoria, at least, can expect to take a double hit from both state and federal vacancy taxes.