Under Victoria’s Retail Leases Act 2003, a landlord cannot pass land tax on to a retail tenant, and any clause in the lease that says otherwise has no legal effect. Queensland takes the same position. New South Wales, Western Australia, and South Australia allow landlords to recover land tax only in limited ways, so which state your premises are in decides whether you owe anything and whether you can claw back what you have already paid.
Victoria: Section 50 Makes the Clause Void
Section 50(1) of the Retail Leases Act 2003 is direct: a provision of a retail premises lease is void to the extent that it makes the tenant liable to pay any amount for tax the landlord owes under the Land Tax Act 2005.1Victorian Small Business Commission. Retail Leases Act 2003 “Void” means the clause has no legal effect from the start. A landlord who writes a land tax recovery clause into a retail lease cannot enforce it, and a tenant who has been paying under such a clause has been paying something they never owed.
Only the offending provision falls away. The rest of the lease continues on its existing terms. You do not need to renegotiate the agreement or leave the premises to escape the charge.
The Exception for Older Leases
Section 50 is not absolute. Section 121 carves out an exception: the prohibition does not apply to retail premises leases entered into before Section 121 commenced, nor to assignments of those older leases.1Victorian Small Business Commission. Retail Leases Act 2003 If your lease was originally signed before that commencement date and it contains a land tax clause, the clause may still bind you.
Check the date the lease was first entered into, not the date you personally started paying rent. A tenant who took an assignment of a pre-commencement lease inherits the older rules along with it.
How Other States Handle Land Tax Recovery
The rule differs sharply across the country, and getting the wrong framework in your head can lead to either an unfounded dispute or a missed refund.
- New South Wales. Land tax is recoverable from retail tenants under the Retail Leases Act 1994, but the amount is capped. It must be calculated as though the land were assessed on a single holding basis, were not subject to any special trust, and the landlord were not classified as a non-concessional company. The NSW disclosure statement template lists land tax as a standard government rate and charge that may be passed through.2NSW Legislation. Retail Leases Act 1994 No 46
- Queensland. Land tax is explicitly excluded from the definition of a lessor’s outgoings under section 7(3)(a) of the Retail Shop Leases Act 1994. Landlords cannot recover it.3Queensland Legislation. Retail Shop Leases Act 1994
- South Australia. Land tax cannot be charged to a lessee as an outgoing, but the lessor can factor it into the rent when setting the rental figure.4SA Small Business Commission. Retail and Commercial Leasing Guide
- Western Australia. Land tax is recoverable, but only on a single holding basis calculated by reference to the tenant’s relevant proportion of the property.
A retail tenant in Melbourne or Brisbane paying land tax likely has a strong claim for a refund. A tenant in Sydney or Perth paying land tax calculated on a single holding basis may be paying exactly what the law allows.
Finding Land Tax in Your Outgoings
Section 46 of the Victorian Act requires the landlord to give a written estimate of outgoings at least one month before the start of each accounting period during the lease term.5Victorian Small Business Commission. Outgoings: Other Charges Under a Lease – Section: Estimate of Outgoings Land tax sometimes appears buried within line items labelled “government levies,” “statutory charges,” or rolled into a general administration fee. If a charge looks like it relates to the landlord’s ownership-based tax rather than the operation of the premises, dig in.
The consequence of the landlord not providing the annual estimate is significant: the tenant is not liable to contribute to any outgoings if the required estimate has not been provided. If your landlord has been charging outgoings without supplying the estimate, your liability for those outgoings may be zero until the estimate arrives.
Getting Back What You Have Already Paid
A Victorian retail tenant who has been paying land tax under a void clause can recover those payments. The Act allows recovery of any payment made contrary to its provisions either through a court of competent jurisdiction as a debt, or through the dispute resolution process under Part 10.1Victorian Small Business Commission. Retail Leases Act 2003
Start with a written demand to the landlord or their managing agent. Include a copy of the lease showing the void clause, the payment records or ledger entries showing how much you have paid, and a calculation of the total claimed. Reference Section 50. Many disputes end here once the landlord or their solicitor confirms the clause is unenforceable.
Work backwards through your records carefully. The standard limitation period for recovering money paid under a void provision is six years, so gather every receipt, bank statement, and outgoings reconciliation from that window. Anything older may be hard to recover through legal proceedings regardless of how clear the breach is.
Mediation Before the Tribunal
If the landlord refuses to refund voluntarily, the next step depends on your state. In Victoria, retail lease disputes must be referred to the Victorian Small Business Commission for mediation before they can proceed to VCAT.6Business Victoria. Retail Lease and Commercial Disputes The VSBC provides preliminary assistance at no cost and offers mediation at a low fee. You cannot skip this step; VCAT will not hear the matter without it.
If mediation fails, the VSBC will certify in writing that mediation has not or will not resolve the matter. That certificate lets you apply to VCAT for a binding order requiring the landlord to repay the amounts collected under the void clause.6Business Victoria. Retail Lease and Commercial Disputes
New South Wales runs a similar process through different bodies. Under section 68 of the Retail Leases Act 1994, a retail tenancy dispute cannot proceed to NCAT unless the NSW Small Business Commissioner has first certified that mediation has failed or is unlikely to resolve it.7NSW Small Business Commissioner. About Retail Leases The application to NCAT must attach that certificate. A NSW dispute, though, will turn on whether the landlord stayed within the single holding basis cap, not on whether recovery was allowed at all.