State and Territory budget snap shot – key business announcements

Following last year’s federal and state government budget deferrals, 2021 has seen a return to a more “normal” timetable for the states and territories releasing their budgets, with most jurisdictions handing down budgets in the first half of 2021.  Following the ACT announcing its budget on 6 October 2021, all states and territories have now handed down budgets for the 2021/22 financial year. 

We outline below some of the key taxation measures that have been announced. Given that it has only been slightly more than six months since most of the states and territories delivered their budgets for the 2020/21 financial year, most jurisdictions have steered away from any major tax announcements or reform. Other themes of the budgets include:

• Continued provision of relief to those heavily affected by the ongoing COVID-19 situation and related disruptions to business, particularly for those states in lockdown.
• Steps to embark on budget repair caused by the massive spending on COVID-19 related support measures implemented during the pandemic.

Highlights of the budgets are:

• Victoria increasing the rate of stamp duty for land transfers with a dutiable value above $2 million and increasing land tax for taxpayers with higher value landholdings;
• Victoria implementing a Mental Health and Wellbeing Levy on larger businesses;
• Victoria and New South Wales implementing similar taxes on windfall gains caused by planning decisions to rezone land; and
• New South Wales and Tasmania introducing exemptions or waivers for motor vehicle duty for electric and hydrogen fuel cell vehicles.

Click on your state or territory below to view details of the key taxation announcements:

Victoria New South Wales Queensland South Australia Western Australia Tasmania Northern Territory Australian Capital Territory

Victoria

On 20 May 2021, the Victorian Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Land Transfer (Stamp) Duty

• High value property rate increase: From 1 July 2021, the land transfer duty payable on property transactions with a dutiable value of above $2 million will increase to $110,000 plus 6.5% of the dutiable value in excess of $2 million.  
• Off-the-plan concession threshold raised: From 1 July 2021 to 30 June 2023, the threshold for the off-the-plan concession for land transfer duty will increase to $1 million for all home buyers. 
• Melbourne area new residential property exemption: From 21 May 2021 to 30 June 2022, purchases of new residential property in the Melbourne local government area (LGA) with a dutiable value up to $1 million that has been unsold for 12 months or more since completion will be exempt from duty. 
• Melbourne area new residential property concession: From 1 July 2021 to 30 June 2022, purchases of new residential property in the Melbourne LGA with a dutiable value up to $1 million that has been unsold for less than 12 months will receive a 50% duty concession. 

Payroll Tax

• Tax-free threshold increase: From 1 July 2021, the payroll tax-free threshold will increase from $650,000 to $700,000.
• Regional employer rate decrease: From 1 July 2021, the regional employer rate of payroll tax will reduce from 2.02% to 1.2125%. 
• Mental Health and Wellbeing Levy: From 1 January 2022, the Mental Health and Wellbeing Levy will begin. It will be implemented as a payroll tax surcharge on wages paid in Victoria by businesses with national payrolls over $10 million a year. A rate of 0.5% will apply for businesses with national payrolls above $10 million, and businesses with national payrolls above $100 million will pay an additional 0.5%. The surcharge rates will be paid on the Victorian share of wages above the relevant threshold. Existing payroll tax exemptions for private schools, hospitals, charities, local councils, and wages paid for parental and volunteer leave will apply for the Levy. 

Land Tax

• Increased land tax rates for high-value landholdings: From 1 January 2022, the land tax rate for taxpayers with larger property holdings will increase by:
  • 0.25% for taxable landholdings exceeding $1.8 million; and
  • 0.3% for taxable landholdings exceeding $3 million.

This change will apply to both the general and trust surcharge rates.

• Increased tax-free threshold: From 1 January 2022, the tax-free threshold for general land tax rates will increase from $250,000 to $300,000. This means for land not held on trust, land tax will only be payable if the total taxable value of Victorian land is equal to or exceeds $300,000. The trust rate scale will remain unchanged. 

Other Announcements

• Windfall gains tax for high-value landholdings: From 1 July 2022, a tax will apply to large windfall gains associated with planning decisions to rezone land.  The total value uplift from a rezoning decision will be taxed at 50% for windfalls above $500,000, with the tax phasing in from $100,000.  The tax is payable on rezonings across Victoria except on rezonings to and from the Urban Growth Zone within existing Growth and Infrastructure Contribution areas, and rezonings to Public Land Zones. The tax applies to rezonings between zone types rather than between zone sub-categories.  
• Wagering and betting: From 1 July 2021, wagering and betting tax will increase from 8% to 10% of net wagering revenue.  

COVID-19 Support Measures

• Grants:  The Victorian Government is offering grants to eligible businesses impacted by lockdown and other COVID-19 related restrictions. The grants include:
  • Suppliers of goods and services involved with live performance events will be eligible for a grant of $200 or $500 per event;
  • Grants of up to $7,000 for one event and $5,000 for a second event for eligible live performance event presenters; and
  • $10,000 grants for eligible small and medium businesses that have experienced a reduction in turnover of at least 70%.

New South Wales

On 22 June 2021, the New South Wales Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp (or Transfer) Duty

• There were no announcements in relation to stamp duties concerning land, including no announcement on when the Government is considering implementing a transition away from stamp duty to a property tax model as mooted in the 2020 budget. A progress paper was released by the government in June on the proposal with feedback closing on 30 July 2021 - https://www.nsw.gov.au/sites/default/files/2021-06/property-tax-progress-paper-june-2021.pdf

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Tax

• There were no announcements in relation to land tax.

Motor Vehicle Duty

• Electric vehicles: The government is progressively abolishing motor vehicle stamp duty on electric vehicles. From 1 September 2021, the purchase of new and second hand battery electric and hydrogen fuel cell vehicles costing less than $78,000 will be exempt from motor vehicle duty.

Other Announcements

• Land value contribution tax: Also on 22 June 2021, while not technically part of the budget, the NSW Government introduced the Environmental Planning and Assessment (Infrastructure Contributions) Bill 2021.  This Bill includes the introduction of a land value contribution payable by developers by reference to the increase in land value arising from a rezoning or the delivery of government infrastructure.  It is not certain when this will be introduced.

COVID-19 Support Measures

• Business grants:  Eligible businesses impacted by COVID-19 restrictions can apply for a one-off grant of $7,500, $10,500 or $15,000, with the amount of the grant dependent on the business’s decline in turnover.

Queensland

On 15 June 2021, the Queensland Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp (or Transfer) Duty

• There were no announcements in relation to stamp duties.

Payroll Tax

• Apprentices: The 50% payroll tax rebate for apprentice and trainees has been extended to 30 June 2022. 

Land Tax

• There were no announcements in relation to land tax.

South Australia

On 22 June 2021, the South Australian Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp Duty

• There were no announcements in relation to stamp duties.

Payroll Tax

• Apprentices and trainees: The exemption from payroll tax for wages paid to new apprentices and trainees is extended for a further 12 months to include relevant contracts of training entered into by 30 June 2022. 
• Feature films:  From 1 July 2021, the legislated payroll tax exemption applicable to wages paid or payable in connection to a feature film produced in South Australia is abolished. 

Land Tax

• Land tax transition fund:  The level of relief provided to taxpayers negatively impacted by changes to the aggregation of land rules will be increased from 30% to 70% of the relevant increase in an eligible taxpayers land tax bill in the 2021/22 financial year.  
• Build-to-rent discount:  A 50% land tax discount will be offered for eligible new build-to-rent projects. The discount will reduce the land value for eligible projects for land tax purposes by 50% until the 2039/40 land tax year. The land tax reduction will apply for eligible new projects where construction commences from 1 July 2021.

Western Australia

On 9 September 2021, the Western Australian Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp (or Transfer) Duty

• Off-the-plan transfer duty rebate:  An existing 75% transfer duty rebate offered to owner-occupiers and investors into a pre-construction contracts that was due to end on 23 October 2021 will be extended to contracts entered into until 24 October 2023, but reduced to a 50% rate with a maximum rebate of $50,000.

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Tax

• Disaster relief:  An existing exemption from land tax to eligible properties destroyed by the Wooroloo bushfire and Cyclone Seroja disasters will be extended for the 2021/22 and 2022/23 financial years. 

Tasmania

On 26 August 2021, the Tasmanian Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights, many of which were announced by the victorious Liberal Government in the lead up to the state’s 1 May 2021 election and some of which were implemented late in the 2020/21 financial year, are:

Stamp Duty

•  There were no relevant announcements for business clients.

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Tax

• Land tax thresholds raised:  The tax free threshold will be increased from $24,999 to $49,999, the start of the middle land tax rate band will be increased to $50,000 and the start of the top land tax will be increased from $350,000 to $400,000.

Motor Vehicle Duty

• Electric and hydrogen fuel cell vehicles: There will be a two-year waiver of duty on the purchase of new and second hand electric and hydrogen fuel cell vehicles.

Northern Territory

On 4 May 2021, the Northern Territory Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp Duty

• There were no announcements in relation to stamp duties.

Payroll Tax

• There were no announcements in relation to payroll tax.

Other Announcements

• Local Jobs Fund:  The Local Jobs Fund, which sets aside funds to provide concessional finance or grants to private sector projects and entities, will be expanded with an additional $60 million in the 2021/22 financial year and $60 million in the 2022/23 financial year.

Australian Capital Territory

On 6 October 2021, the ACT Government’s budget for the 2021/22 financial year was handed down. The budget’s key highlights are:

Stamp Duty

• Permanent extension of off-the-plan duty concession:  A full concession from duty for purchases of off-the-plan units up to the value of $500,000 will be made permanent. 
• Lower residential duty rate:  There will be a lower residential conveyance duty tax rate on dutiable values up to $200,000 for owner-occupiers. 
• Commercial transactions:  The tax-free threshold for dutiable commercial transactions will be increased by $100,000  so that from 1 July 2021 duty on commercial transactions will be nil where the property is valued at $1,600,000 or below and applied at a flat rate of 5% for transactions where the commercial dutiable property is valued at over $1,600,000.

Payroll Tax

• Exemption for apprentices and trainees extended:  The existing payroll tax exemption for wages paid to apprentices and trainees employed after 1 August 2020 has been extended for wages paid for the period from the start of employment to 30 June 2022 (previously 30 June 2021). 

 Land Tax

• COVID-19 relief:  Residential landlords who reduce the rent of tenants whose income is affected by the COVID-19 outbreak by at least 25% will be eligible for land tax credits of 50% of the rent reduction up to a maximum of $100 per week from 1 August to 31 December 2021. 

 

If you have any queries please contact Kathryn Bertram or Lachlan Smithers.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).