5 July, 2018
Following the NSW State Budget's release on 19 June 2018, all of the State Budgets (other than in South Australia) have now been handed down. The South Australian Budget is due to be handed down on 4 September 2018. The following article outlines the material changes to indirect taxes including stamp duty, payroll tax and land tax.
What you need to know
The State Budgets are a mixed bag for taxpayers. While most rates have remained the same, there were some rate changes and additional rebates and duties applicable to certain taxpayers.
Foreign investors looking to purchase Australian property will need to be aware of increased Foreign Buyer Surcharge rates. Most States have increased the Surcharge to around 7-8%.
In Victoria, partnerships and foreign investors should consider recent changes to the definitions of 'partnership interests', 'foreign corporations' and 'foreign trusts'.
Queensland, Tasmania and the Northern Territory are all offering payroll tax rebates to encourage local employment.
In Queensland, high value landholders should keep the new increased land tax rates in mind.
Below we look at the changes in Stamp Duty, Payroll Tax and Land Tax.
Stamp Duty
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New South Wales
There were no changes to the NSW stamp duty rates and thresholds.
Victoria
While no significant changes to stamp duty rates or thresholds were announced in the Budget, the State Taxation Acts Amendment Bill 2018 contained a number of material amendments to the Victorian Duties Act 2000.
The newly assented Bill reverses the effect of the recent Danvest decision. In that decision, the Victorian Supreme Court of Appeal held that the Commissioner cannot impose land transfer duty on changes in partnership interests, despite the partnership holding a beneficial interest in Victorian land. Partners will now be seen to have an interest in underlying partnership property and transfer and landholder duty will now be payable for any changes in partnership interests.
The Bill also expanded the definition of 'foreign corporation' and 'foreign trust' when calculating landholder interests for land transfer duty and foreign purchaser additional duty. The control test (for companies) and substantial interest test (for trusts) have been expanded to include an aggregation of all interests held by any foreign natural person, foreign corporation or foreign trust even if they are unrelated.
Western Australia
While there were no changes to stamp duty rates or thresholds, the Budget increased the Foreign Buyers Surcharge from 4% to 7% in relation to the dutiable value of residential property purchased by foreign individuals and entities in WA from 1 January 2019. The increase will bring WA into line with other States who currently have their surcharges levied at 7-8%.
Tasmania
There were no changes to stamp duty rates or thresholds. The Budget introduced a Foreign Investor Duty Surcharge of 3% of the dutiable value for all purchases of residential property by foreign residents and 0.5% for all purchases of primary production land by foreign residents.
Queensland
There were no changes to the stamp duty rates and thresholds. From 1 July 2018, the Additional Foreign Acquirer Duty will increase from 3% to 7%.
South Australia
While the South Australian Budget has been delayed to 4 September 2018, there have still been some recent developments in the stamp duty space. The recently assented to Real Property (Fees) Variation Regulations 2018 has abolished stamp duty on transfers of non-residential or non-primary production land from 1 July 2018. Earlier in the year, South Australia also introduced a Foreign Purchaser stamp duty surcharge of 7%.
ACT
Under the 2018/19 Budget, conveyance (stamp) duty commercial property transactions of $1.5 million or less will be fully abolished. It is estimated that approximately 70% of commercial property transactions will no longer be liable to pay duty. For transactions over $1.5 million, a flat rate of $5.00 per $100 to the total transaction value is payable.
Northern Territory
While there were no changes to the stamp duty rates and thresholds, the Budget removed the stamp duty exemption on the transfer of certain petroleum and pipeline interests.
Payroll tax
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NSW
The payroll tax threshold will be increased from $750,000 to $850,000 on 1 July 2018.
Subsequently, the threshold will increase by a further $50,000 each year until it reaches $1 million for 2021-22.
Victoria
The payroll tax rate will be reduced to 2.425% for regional Victorian businesses.
Businesses are "regional" where at least 85% of a business' payroll goes to regional employees.
Queensland
The 50% payroll tax rebate on wages for apprentices and trainees has been extended to 30 June 2019.
This rebate will still be provided where wages paid to apprentices and trainees are exempt from payroll tax, and can be offset against payroll taxes for other employees.
Western Australia
No changes announced in budget.
South Australia
The Budget papers have not been released yet.
Tasmania
From 1 July 2018, the payroll tax rate for wages between $1.25 million and $2 million will be reduced to 4%. The payroll tax rebate on wages for apprentices and trainees in industries facing skill shortages has been extended to 30 June 2021. The industries that may claim this rebate include:
- building and construction;
- tourism and hospitality; and
- manufacturing.
Between 1 July 2018 and 30 June 2021, interstate businesses which relocate to regional Tasmania will receive a three year payroll tax exemption.
ACT
No changes announced in budget.
Northern Territory
Employers will receive a two year payroll tax rebate where they either:
- employ a new employee who lives and works in the Northern Territory; or
- replace an existing employee who is not resident in the Northern Territory with one who lives and works in the Northern Territory.
This rebate will apply for employees hired between 1 May 2018 and 30 June 2020.
Land Tax
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NSW
No changes announced in budget.
Victoria
No changes announced in budget.
Queensland
From 1 July 2018, increased land tax rates will apply for aggregate holdings above $10 million, as follows:
- 2.25% for individuals; and
- 2.5% for companies, trustees and absentee landholders.
These increased rates will apply to every dollar of taxable value over $10 million.
Western Australia
No changes announced in budget.
South Australia
The Budget papers have not been released yet.
Tasmania
Between 8 February 2018 and 7 February 2021, newly built houses which are made available for long term rental will receive a three year land tax exemption.
Between 15 March 2018 and 14 March 2019, rental properties located within the Greater Hobart area that are put up for rent for a minimum term of 12 months, and were previously advertised for use as short-stay accommodation, will receive a one year land tax exemption.
ACT
No changes announced in budget.
Northern Territory
No changes announced in budget – note that there is no land tax in the Northern Territory.
For further information, please contact:
Barbara Phair, Partner, Ashurst
barbara.phair@ashurst.com
