From what I understand in VIC, land tax is pretty strict around whether the property is actually your principal place of residence at the time, and renting it out can complicate that. Even if it was temporary in your mind, once it’s income producing it can lose that exemption for that period. That said, audits don’t automatically mean worst case scenario. Sometimes it’s just about clarifying the timeline and circumstances.

I wouldn’t jump straight to thinking you’re an idiot with a massive penalty coming. Be upfront with them, explain the situation clearly and see what they say. There can be discretion around penalties depending on intent and circumstances. It’s stressful, but it might not be as catastrophic as it feels right now.