With land tax bills on the rise in Victoria, many commercial tenants are looking for ways to avoid being hit with unexpected costs. The Retail Leases Act 2003 (Vic) (RLA 2003) is designed to protect tenants by generally prohibiting landlords from passing land tax on as an outgoing. But not every lease is covered—and the difference could cost you thousands.
What Makes a Lease “Retail” Under the RLA 2003?
Not all commercial leases benefit from the Act’s protection. To qualify, your premises must meet the definition of a “retail premises” and avoid several key exclusions. Here are some of the main issues to consider:
- Lease Duration: If your lease is for less than one year, the Act may not apply—unless you stay in possession for longer.
- High Occupancy Costs: If your total rent and outgoings exceed $1 million per year (excluding GST), your lease might be excluded.
- Type of Tenant: Leases to listed corporations, their subsidiaries, or certain overseas companies are not protected.
- Ministerial Determinations: The government has issued specific carve-outs for some types of premises and tenants, such as long-term leases with substantial obligations, market land, and certain community or agricultural uses. The determinations are lengthy and may apply to your lease.
The Retail Test: More Than Just a Shopfront
Even if you clear the exclusions, your premises must be used “wholly or predominantly” for selling goods or providing services by retail. The Act looks at:
- What is being sold or provided?
- Are customers the end-users (not reselling)?
- Is the public able to access your premises?
- Does your lease allow retail activity?
It’s not always obvious—some businesses that don’t look like typical “retailers” may still qualify, while others may not.
Why Getting It Wrong Matters
If your lease is NOT covered by the RLA 2003, your landlord may be able to pass on land tax, and you could miss out on other important tenant protections (such as repair obligations). On the other hand, assuming you’re protected when you’re not can lead to costly surprises.
Key Triggers to Watch For
| Issue | Potential Impact |
| Lease under 1 year | Act may not apply |
| Occupancy costs > $1m p.a. | Act may not apply |
| Listed/overseas tenant | Act may not apply |
| Ministerial determination | Act may not apply |
| Not predominantly retail | Act may not apply |
Don’t Leave It to Chance
The rules are complex and one small detail can change your position entirely. Recent case law has held that parties to a commercial ( non retail ) lease to be a retail lease with the ability for the tenant to claw back substantial land tax payments. If you are not sure, it is important to get professional advice.
Want to know if your lease is protected?
Contact Hill Legal for a tailored review of your lease and a clear explanation of where you stand. We’ll help you identify risks, understand your rights, and make sure you’re not paying more than you should.
Get in touch today on 035976 6500 to secure your position under the Retail Leases Act 2003 (Vic) and avoid unnecessary land tax liability.
