Property taxes update

By Craig Whatman - June 23, 2017

On Thursday 22 June 2017, the legislation implementing the stamp duty and land tax changes announced in the 2017-18 Victorian Budget was passed with one significant amendment. The New South Wales, Queensland and South Australian Budgets that have been released within the last week or so also contain stamp duty and land tax changes that will impact property acquisitions and holdings in those states.

A summary of the changes are below:

Victoria

The Bill that contains the stamp duty and land tax changes announced in the Victorian Budget was passed by the Parliament on Thursday 22 June 2017.

There has been one important amendment to the Bill. The provisions that were intended to change the rates and land tax re-valuation cycle from every 2 years to annually and to centralise the valuation process within the Valuer-General’s office have been removed.

We understand that a number of Victorian Councils have been lobbying against this change and the Government decided to remove it in order to get the required support of the minor parties in the Legislative Council. On the assumption land values continue to rise that is good news for our clients, although it is possible that the valuation changes might be re-introduced at a later date.

New South Wales

  • From 1 July 2017, the stamp duty surcharge payable by foreign purchasers of residential land in NSW will increase from 4% to 8%.
  • From the 2018 land tax year, the land tax surcharge payable by foreign owners of residential land in NSW will increase from 0.75% to 2%.
  • Australian-based foreign controlled companies will be entitled to claim a refund of the stamp duty and land tax surcharges previously paid if they develop and sell the land as residential premises (i.e. homes) within 5 years of purchasing it. Guidelines will be published by the Queensland Treasury for determining which developers are eligible to claim a refund.
  • From the 2018 land tax year, commercial residential property will be exempt from the foreign land tax surcharge (it currently applies to all land). The Office of State Revenue will publish a determination identifying the eligible classes of commercial residential property. If the surcharge has been paid in respect of eligible property for the 2017 land tax year, a refund will be available.
  • From 1 July 2017, purchases of residential property by investors will be excluded from the 12 month off-the-plan transfer duty deferral regime. Purchasers will need to declare an intention to occupy the property as the Principal Place of Residence in order to access the duty payment deferral.

Queensland

  • From the 2018 land tax year, foreign owners of land in Queensland with a taxable value of at least $350,000 will pay a land tax surcharge of 1.5%.
  • The Queensland government had previously introduced a foreign stamp duty surcharge of 3% with effect from 1 October 2016. The rate of 3% was not increased in the Budget.

South Australia

  • From 1 January 2018, a stamp duty surcharge of 4% will be payable by foreign purchasers of residential property in South Australia.
  • The existing off-the-plan stamp duty concession will be extended until 30 June 2018, but will be restricted so that it no longer applies to foreign purchasers.
  • A $10 000 grant will be provided to eligible off-the-plan apartment purchasers where the contract is entered into between 22 June 2017 and 30 September 2017.
  • A five year land tax exemption will apply to eligible apartments purchased off-the-plan where the contract is entered into between 22 June 2017 and 30 June 2018.

If you have any queries in respect of these changes or any other stamp duty or land tax issues, please contact your Pitcher Partners tax expert. 


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