State Taxes Update – State Budgets and NSW landholder duty changes for public entities

Victoria

Expected Start Date

Abolition of stamp duty on commercial and industrial properties

In a significant development, Victoria has announced that it will be abolishing stamp duty on commercial and industrial properties, and moving to an annual property tax after a 10 year transitional period.

Details are yet to be released (expected late 2023).

It may potentially be an “opt-in” approach. Current commercial or industrial property owners will be exempt from the property tax but will apply when the property is sold in the future. Once a property enters the new property tax system, stamp duty will never apply again and the annual property tax will apply.

Temporary (10-year) COVID-19 Debt Levy

A temporary COVID-19 Debt Levy / Land tax surcharge will apply from the 2024 land tax year for ten years, as follows:

• The tax-free threshold for land tax will be decreased from AUD300,000 to AUD50,000.
• For taxable landholdings over AUD300,000, the surcharge will be a flat AUD975 plus an increased rate of land tax by 0.1%.

Absentee owner surcharge rate to be increased from 2% to 4%.

This surcharge applies to foreign owners of residential properties in Vic.

2024 land tax year

NSW

Expected Start Date

Removing landholder duty concession for public entities

On 11 May 2023, the NSW introduced draft legislation to abolish an existing landholder duty concession for “public landholders”.

Currently, landholder duty is levied at concessional rates of 0.55% for acquisition of “public landholders”, which includes listed companies, listed trusts and certain widely held trusts that have landholdings in NSW with a value of AUD2m or more.

Under the legislative amendments, such acquisitions will now be subject to landholder duty at full rates of up to 5.5% of the value of the land and goods in NSW. Thus, “take-private” transactions may now be much more significant duty liabilities where the target entity owns material land assets in NSW.

Western Australia

Expected Start Date

Land tax relief for build-to-rent developments — Bill introduced (WA): 50% land tax exemption for 20 years

Some of the key requirements for a build-to-rent development to qualify for the 50% exemption are as follows:

• The entire development must be owned by the same owner or group of owners and must be managed by the same management entity.
• The development must have been constructed or substantially renovated for the purpose of providing at least 40 self-contained dwellings for lease under a residential tenancy agreement.
• The dwellings in the development must become able to be lawfully occupied between 12 May 2022 and 30 June 2032; and
• The dwellings must be available to rent for a term of at least 3 years, although residents can choose a shorter lease term.

The land tax exemption will be retrospectively removed if a build-to-rent development ceases to qualify for the exemption within the first 15 years. That is, the owner will be required to pay the land tax that was not assessed for the years the exemption applied.

Northern Territory

Expected Start Date

Abolition of stamp duty on non-land assets

The transfer of non-land business assets (including goodwill, intellectual property and statutory licences) will no longer be subject to stamp duty in NT.

QLD and WA will be the only States remaining that levy stamp duty on the transfer of non-land business assets.