Lily D’Ambrosio, Andrews Government staying mum on Trust for Nature Covenants land tax

The Victorian Government wants landholders to place 20,000ha under conservation covenants. But there’s still a chance they’ll get whacked by land tax.

Covenant tax: Trust for Nature wants Land Tax exemptions for landholders setting up conservation covenants on their properties.

The Victorian Government’s bid to invest $31m encouraging landholders to put 20,000ha in Trust for Nature Covenants has hit a hurdle, after the State Revenue Office warned they could attract land tax.

Environment Minister Lily D’Ambrosio last week announced a partnership with Trust for Nature to encourage farmers and lifestyle block owners to place more than 20,000ha of their land under covenants to protect and revegetate sites, as well as locking up carbon.

The Minister for Energy, Environment and Climate Change, Lily D'Ambrosio speaking to the media during a press conference. Picture: NCA NewsWire/Daniel Pockett

But while land used for primary production or as a principal place of residence is exempt from land tax, neither Trust for Nature nor the State Revenue Office could provide definitive answers on whether that exemption is extinguished once a conservation covenant is applied.

An SRO spokesman said “generally speaking, if a conservation covenant is placed on primary production land and the owner ceases using the land primarily for primary production as a result, the land will become subject to land tax”.

The tax on a block worth $500,000 is $775, rising to $2975 on a $1m block.

When asked what would happen if a covenant was applied to part of a property or land held under separate titles, the SRO stated: “there is no specific exemption or concession from land tax for land (or part of land) the subject of a conservation covenant”.

Uncertainty over land tax liability has prompted Trust for Nature to call on the government to exempt conservation covenants to act as incentive for farmers to protect and revegetate their properties, which usually sit on several titles.

“This highlights the fact that environmental stewardship is currently penalised in favour of agriculture,” Trust for Nature spokeswoman Kathy Cogo said.

“An amendment to the Land Tax Act, that offered a tax exemption to landholders managing their land for conservation under a covenant, would remove a barrier to protecting land for conservation, and would benefit farmers, nature and the public at large.”

Currently, the owners of lifestyle and other bush blocks must currently pay land tax on any land that is not their principal places of residence or used for farming.

The Weekly Times asked Ms D’Ambrosio if the government would support removing the land tax obligation on Trust for Nature covenants, to boost BushBank uptake.

But the Minister ignored the question, simply stating “we will partner with Victorians who want to volunteer to be part of the BushBank program because they’re passionate about revegetating our state and unlocking new carbon farming opportunities.”