Last updated: June 2026

Victoria has just introduced laws giving employees a right to work from home. The headlines warned of a new land tax for remote workers. That part is largely a beat-up. But underneath the noise sits a real rule that can catch self-employed builders and tradies who run their business from home, and it has nothing to do with the new laws.

If you run your building or trade business out of a home office, a shed, or a garage, here is the short version. Working from home as an employee will not cost you land tax. Running a genuine business from home might, but only in specific circumstances, and mostly only in Victoria. Most builders and tradies will never pay it. A smaller group running a substantial operation from a high-value property could.

That distinction matters, because the recent coverage blurred it. Let us walk through what actually changed, what did not, and what it means for the way you run your business.

What did Victoria actually change?

On 16 June 2026, the Victorian Government introduced the Equal Opportunity Amendment (Work from Home) Bill to State Parliament. If it passes, eligible employees whose roles can reasonably be performed remotely will have a legal right to work from home at least two days a week. The right is proposed to start on 1 September 2026, with a delayed start of 1 July 2027 for workplaces with fewer than 15 employees.

The right sits inside the Equal Opportunity Act rather than industrial relations law, and disputes would go to the Victorian Equal Opportunity and Human Rights Commission for conciliation. It would make Victoria the first Australian jurisdiction to legislate a standalone right to work from home.

This is an employment law change. It is about whether a worker can insist on remote days. It does not change any tax. That is the first thing to be clear on, because the two issues got tangled together in the reporting.

So where did the land tax scare come from?

As the work from home plan gained attention, commentary surfaced suggesting remote workers could be hit with land tax on their homes. Premier Jacinta Allan rejected the link directly, calling claims of a new land tax for people working from home nonsense.

On the substance, she is right that the new laws do not create a land tax. But tax advisers were also making a fair point underneath it. Victoria already has a rule that can strip part of the home land tax exemption when a property is used to run a business, and that rule has been catching more people since the threshold dropped. The work from home debate simply shone a light on it.

Working from home as an employee will not cost you land tax. Running a genuine business from home might, but only in specific circumstances.

What is the actual rule that affects builders and tradies?

In Victoria, your principal place of residence is exempt from land tax. The State Revenue Office is explicit that where an employee works from home as an alternative to their employer’s premises, land tax does not apply, as long as the employer’s business is run from another location.

The exposure is different for the self-employed. Under section 62 of the Land Tax Act 2005, if your home is used to carry on what the law calls a substantial business activity, the exemption only applies to the part of the land used for living. The business portion becomes taxable. That captures the way a lot of trades actually operate, a sparky, chippie, plumber or sole-operator builder who keeps the ute and tools at home, stores stock in a shed, and does the books at the kitchen bench after the last job.

This is the part that matters for builders and tradies who are sole operators or run their own small companies. If your registered business address is your home, you store materials in a shed on the property, you run your admin and quoting from a dedicated home office, and you claim the associated deductions, you are closer to this rule than an employee doing two days a week on the laptop at the kitchen table.

What counts as a substantial business activity?

The SRO weighs a range of factors rather than applying a single test. Its published ruling and adviser guidance point to a few markers that lift the risk:

• Gross income of around $30,000 or more from the home-based activity
• More than roughly 30 per cent of the home’s floor space or land area used for the business
• Employees or contractors, not just family, working on the premises
• A council permit required or issued for the activity
• Advertising or promotional material that lists the home as the business address, and significant tax deductions claimed against it

The SRO’s own worked example is instructive. A couple running a business that earns well above $30,000, uses more than 30 per cent of the home, and employs a gardener is treated as conducting a substantial business activity, so part of their land becomes taxable. By contrast, an employee who occasionally works after hours in a spare garage, where the space is also used privately by family, is not. The line sits at scale and dedication of space, not at the simple fact of working from home.

Why more people are getting caught now

The rule itself has not changed. What changed is the threshold. From 1 January 2024, Victoria cut the general land tax threshold from $300,000 to just $50,000 of taxable land value. That single change pulled tens of thousands of landowners into the system who were previously below the line.

For a home-based business, the maths is simple enough to feel. Take a home where 20 per cent of the floor space is used solely for the business and the use is substantial. Before 2024, the land had to be worth $300,000 before any tax applied to that business portion. Now, once the taxable land value reaches $50,000, the business slice is in scope. On a typical metropolitan block, that threshold is easily crossed.

The SRO has also been more active. It runs data matching against ATO records, where business addresses, contractor payments and deductions are all disclosed, and has been issuing audits to homeowners running businesses from a house, shed or garage. None of this is new law. It is the same law, applied to far more properties, with better data.

How much could it actually cost?

For most, the answer is nothing, because most home offices do not meet the substantial business activity test. For those who do, the bill is partial, not a full investment-property assessment. One adviser worked example put a home valued at around $900,000 with 10 per cent used for business at roughly $500 a year in land tax on the business portion under current rates.

It is not ruinous money. But it is an annual cost that many self-employed builders and tradies do not know exists, and it stacks on top of the wider cost and policy pressures builders and tradies are already managing in 2026. Getting an audit assessment for prior years, with penalty interest attached, is a genuinely unpleasant surprise on top of everything else.

Is this just a Victorian problem?

Largely, yes, in terms of how aggressively it bites. The principle exists elsewhere, but the settings are more forgiving.

In New South Wales, Revenue NSW allows an owner to use one room of a home for incidental business purposes and still keep the full exemption, as long as the business is primarily conducted elsewhere. Its guidance even uses the example of a plumber storing equipment or materials in a shed, or a professional seeing clients after hours in a set-aside room, and treats that as incidental. Only when more than one room is used, or the business is run primarily from home, does a partial concession come into play.

Queensland applies a home exemption based on the property being your principal place of residence, with its own eligibility test. Across the states the common thread is that a genuine main residence is exempt, and incidental work from home does not break it. Victoria’s combination of a hard substantial business activity test and a $50,000 threshold is what makes it the sharpest case in the country right now.

Victoria’s combination of a hard substantial business activity test and a $50,000 threshold makes it the sharpest case in the country.

What should home-based builders and tradies do?

This is not a reason to panic, and it is not advice to change how you work. It is a reason to know where you stand. A few practical steps:

• Work out roughly how much of your home, by floor area or land area, is used solely for the business. If it is a corner of a room, you are almost certainly fine. If it is a dedicated office plus a materials shed plus a yard, take it seriously.
• Understand that the deductions you claim at tax time, and the business address you register, are visible to the SRO through data matching. Consistency across your records matters.
• Keep the home, capital gains and insurance angles in view together. Running a business from home can also affect the capital gains tax main residence exemption when you sell, and your home insurance may not cover business use unless disclosed.
• If you are genuinely near the line, get advice from a qualified practitioner. Land tax is a state tax, and only a qualified legal or tax adviser can apply it to your specific circumstances.

For more on running a sustainable building business, listen to The Good Builder Podcast, where builders and operators share how they manage the parts of the business that never make the headlines. For more on the levers you can control, see the five things home builders and tradies can still control in 2026, and on how a tidy, visible business sets you up, read why builder searches are surging and what clients check before they call.

Your Questions Answered:

Does working from home trigger land tax in Victoria?

Not for employees. The State Revenue Office confirms that where an employee works from home as an alternative to their employer’s premises, land tax does not apply, as long as the employer’s business runs from another location. The risk applies to home-based businesses, not remote employees.

Will the new Victorian work from home laws cost me land tax?

No. The Equal Opportunity Amendment (Work from Home) Bill is an employment law change about a right to work remotely. It does not create or change any land tax. The Premier has rejected suggestions that it does.

When does a home-based building or trade business become liable for land tax?

When the home is used to carry on a substantial business activity under section 62 of the Land Tax Act 2005. Factors include earning around $30,000 or more from the activity, using more than about 30 per cent of the home, employing staff on site, holding a council permit, and claiming significant deductions. Only the business portion of the land is taxed.

Is this a problem outside Victoria?

It is far less aggressive elsewhere. New South Wales allows incidental business use, such as one room or a storage shed, while keeping the full exemption if the business is primarily run elsewhere. Queensland applies a principal place of residence test. Victoria’s low $50,000 threshold and substantial business activity test make it the tightest case.

What should I do if I run my building business from home?

Estimate the share of your home used solely for the business, keep your records consistent across tax and registration, consider the capital gains and insurance implications, and if you are near the line, get advice from a qualified practitioner. The Good Builder is not a tax or legal adviser and this article is general information only.

This article is general information only and does not constitute tax, legal or financial advice. Land tax is a state-based tax and its application depends on individual circumstances. Builders and tradespeople should seek advice from a qualified tax or legal practitioner before making decisions.

Author: TGB Editorial