On 1 January 2015, more properties became subject to congestion levies.
The Victorian Government has more than doubled the geographical area that is subject to a congestion levy under the Act with the introduction of a Category 2 Area added to the existing Category 1 Area.
Dates to remember
For owners/operators of a “leviable parking space” 21 January 2015 was the first date to add to your diary.
By that date you must have registered with the State Revenue Office your leviable spaces in the new Category 2 Area and must have submitted an estimated annual return for the 2015 levy year.
Once there has been an assessment of the number of spaces in March 2015, then the levy for the current year must be paid in the same manner as Category 1 Area spaces namely in full by 21st July 2015 or by quarterly instalments (on 21 July, October, January, March).
The good news
Despite the additional costs the Category 2 levy adds to development and the occupation of premises with leviable parking spaces attached, there is some good news in that the Category 2 levy rate commences at $950.00 per annum as opposed to the full levy rate payable for Category 1 of $1,340.00 per annum.
As is the case with the Category 1 levy, the Category 2 levy rate will be subject to annual CPI increases to commence in 2016.
A parking space may be exempt if it is either:
- owned by a specific class of owner;
- used for a particular purpose; and/or
- provided free of charge.
Some of the congestion levy exemptions that apply are as follows:
- Residential parking;
- Guest parking at hotels;
- Parking for maintenence services and loading bays;
- Visitor parking;
- Parking spaces owned by councils and charities;
- Parking for people attending special events;
- Parking for shift workers;
- Parking for fleet vehicles; and
- Car sales display spaces, car service spaces or car hire spaces.
Category 1 Area owners/operators
While Category 1 Area owners/operators are already familiar with the levy regime they are also required to register with the State Revenue Office their interests in leviable parking spaces in the Category 2 Area by 21st January 2015.
Buyers of properties in the Category 1 Area or Category 2 Area containing leviable parking spaces must also be registered with the State Revenue Office after settlement even if the seller of the property was registered or was not registered.
A tenant who takes a lease of property in the Category 1 Area or the Category 2 Area which includes a leviable parking space should consider if the lease requires the tenant to pay or reimburse to the landlord the congestion levy payable for the relevant parking spaces.
Where parking spaces are “common areas” a tenant should consider if the relevant lease requires the tenant to contribute towards the congestion levy that may be payable by the landlord for those spaces.
Failure to comply
Anyone who does not register leviable parking spaces as required or who fails to pay the levy will be liable to substantial fines, which (if applied) can be as much as $8,500 per space.
Additional interest may also be payable in respect of any levies not paid when falling due and payable.
Who benefits and who really pays?
The ultimate beneficiary of the levy will be the State Government.
The introduction of the new Category 2 levy adds substantial statutory outgoings to a property with leviable parking spaces attached.
For example an office in the Category 2 Area with 4 spaces attached has $3,800 to pay in congestion levies for 2015 on top of the current land tax, water and council rates.
The everyday consumer or tenant will in time likely bear the brunt as well of these additional costs.
It remains to be seen whether the new congestion levy will have any impact on reducing congestion in Melbourne, one of the key policies behind the levy.
For more information or to discuss the changes, please contact a member of our Property team on (03) 8600 8888.
Note: This update is a guide only and is not intended to constitute legal advice.