State and Territory budgets snap shot – key business announcements

With the ACT releasing its budget on 2 August 2022, every Australian state and territory has now handed down its budget for the 2022/23 financial year.

We outline below some of the key business taxation measures that have been announced. Broadly speaking, a theme of the budgets for each state and territory is the continued winding back of COVID-19 related relief measures.  We expect that the revenue authorities will continue to increase their focus on compliance and debt recovery, given budget pressures following the massive spending incurred by Governments in response to the pandemic.  Highlights of the budgets are:

• New South Wales introducing an option for certain first home buyers to pay an annual property tax instead of paying stamp duty.
• New South Wales increasing the rate of foreign investor surcharge land tax to 4%.
• Queensland introducing three additional royalty rate tiers to the coal royalty structure.
• Queensland following Victoria by introducing a mental health payroll tax levy on large employers.
• Western Australia following New South Wales, Victoria, and South Australia by introducing a 50% reduction in land tax for new build-to-rent projects.  The ACT has also announced its own build-to-rent initiative in relation to the lease variation charge.
• Western Australia announcing it will introduce a zero and low emissions vehicles tax and the new Labor government in South Australia repealing its zero and low emissions tax which was scheduled to commence in 2027-28.

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

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

Victoria

On 3 May 2022, the Victorian Government’s budget for the 2022/23 financial year was handed down. The budget’s key highlights are:

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Transfer (Stamp) Duty

• There were no announcements in relation to stamp duties.

Land Tax

• There were no announcements in relation to land tax.

Other Announcements

• Motor vehicle duty exemption: From 1 July 2022, a motor vehicle duty exemption will be provided for the sale or transfer of wheelchair accessible commercial passenger vehicles that provide unbooked services.  The exemption will only apply to the sale or transfer of eligible vehicles that are less than 2 years old. This initiative is intended to support wheelchair users by encouraging investment in wheelchair accessible transportation.
•  Windfall gains tax:  As previously announced, from 1 July 2023 a tax will apply to large windfall gains associated with planning decisions to rezone land that raise land valuations above $100,000.  The tax will apply to the taxable uplift in value, phasing in from a value uplift of $100,000 and reaching a maximum rate of 50% for value uplifts about $500,000.
• Landowners will have the option to defer payment of the tax until the next dutiable transaction or until 30 years have passed, whichever occurs first.
• Some limited exemptions are provided for certain land held and used by charities, land rezoned to certain rural zones, rezoning to and from the Urban Growth Zone within the Growth Areas Infrastructure Contribution area and exemptions for pre-existing contracts of sale and options and rezonings underway before 15 May 2021.​
• Gambling tax:  From 1 July 2023, the Government will equalise the gambling tax rates for all electronic machine operators by bringing the rates paid by the casino licence operators in line with those paid by venue operators with club entitlements.  Commission-based play on gaming machines will continue to be taxed at 10%.

New South Wales

On 21 June 2022, the New South Wales Government’s budget for the 2022/23 financial year was handed down. The budget’s key highlights are:

Stamp (or Transfer) Duty

• Introduction of First Home Buyer Property Tax Option: First home buyers purchasing a property up to $1.5 million will be able to pay an annual property tax instead of paying transfer duty at the time of purchasing a property.
  • First home buyers will be able to opt into the plan from 16 January 2023. Property tax will apply from the date of completion/settlement.
  • Eligibility is restricted to individuals over 18 years of age who are Australian citizens or permanent residents (or purchasing the property with an Australian citizen or permanent resident).  Individuals and their spouses must not have previously owned or co-owned a residential property in Australia or received a First Home Buyer Grant or duty concessions. 
  • Individuals must move into the property within 12 months of purchase and live in it continuously for at least 6 months to have the option of paying property tax. 
  • Rates of property tax will be $400 plus 0.3% of the land value for properties whose owners live in them or $1,500 plus 1.1% of land value for investment properties. 

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Tax

• Increase to the foreign investor surcharge land tax:  The foreign investor land tax surcharge will increase from 2% to 4% per annum from the 2022/23 land tax year.
• Reduction in the discount available for early payment of land tax:  The discount for full payment of land tax within 30 days of issue of a notice of assessment will be reduced from 1.5% to 0.5% from 1 January 2023.

Other Announcements

• Point of Consumption (PoC)  and betting taxes:  From 1 July 2022, PoC Tax will increase to 15%. This tax is levied against wagering and betting activity by customers located in New South Wales at the time they make any bet.  Other betting tax rates will be readjusted to 15%, ensuring all rates are the same. These include taxes levied on totalizator and fixed odds bets.
• Changes in beneficial ownership, duty on the grant of options  and duty on acknowledgements of trust – On 19 May 2022, the Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (NSW) received royal assent.  This Act made a number of amendments to the Duties Act 1997 (NSW).  Here is a link to a separate Insight article we have prepared which outlines the implications of these key changes - https://jws.com.au/en/insights/articles/2022-articles/beware-the-new-changes-to-duty-laws-in-new-south

Queensland

On 21 June 2022, the Queensland Government’s budget for the 2022/23 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

• Extended deduction phase out:  It is proposed that for payroll tax liabilities arising on or after 1 January 2023, the payroll tax deduction will be extended from the current ceiling of $6.5 million in annual Australian taxable wages up to $10.4 million in annual Australian taxable wages.
• Apprentice and trainee rebate:  The 50% payroll tax rebate on the exempt wages of apprentices and trainees is extended to 30 June 2023.
• Mental Health Levy:  The Government is introducing a mental health levy on large employers (or groups of employers) who have annual Australian taxable wages of over $10 million.  It is proposed that for payroll tax liabilities arising on or after 1 January 2023:
  • A 0.25% levy will apply to an employer’s annual Australian taxable wages above $10 million; and
  • An additional 0.5% levy will apply to annual Australian taxable wages above $100 million of the employer (or group of employers).

Land Tax

• Recently the Queensland government passed amendments to the Land Tax Act 2010 (Qld) which will take effect for land tax liabilities arising on 30 June 2023. Under the new laws, certain interstate land will be taken into consideration when determining the rate of land tax to be charged in respect of the taxpayer’s Queensland land holdings. This means that if a taxpayer also holds land in other Australian jurisdictions, from 30 June 2023 the taxpayer may be liable to pay more land tax in Queensland than is currently payable as a result of the interstate landholdings.

Other Announcements

• Progressive Coal Royalty Rates: The Government has introduced 3 new tiers to the coal royalty structure, with effect for coal sold, disposed of or used on or after 1 July 2022:
  • A rate of 20% on that part of the average price per tonne more than $175 but not more than $225;
  • A rate of 30% on that part of the average price per tonne more than $225 but not more than $300; and
  • A rate of 40% on that part of the average price per tonne more than $300.
• Betting Tax reform: A 5% racing levy will be applied to the existing betting tax. Additionally, making bonus bets (or free bets) will also be taxable.  It is proposed that these changes will take effect from 1 December 2022.

South Australia

On 2 June 2022, the South Australian Government’s budget for the 2022/23 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.

Land Tax

• Changes to rates and thresholds:  The top threshold for the calculation of land tax has increased from $1,350,000 in 2021/22 to $2,000,000 in 2022/23.
  • Land tax thresholds will increase by around 11% in line with average increases in site values as determined by the Valuer-General.   
  • The marginal land tax rate has also been reduced from 1.25% in 2021/22 to 1.00% in 2022/23.

 Other Announcements

• Abolition of electric vehicle tax:  The road user charge on electric vehicles in South Australia has been repealed.  This was expected to commence in 2027/28.

Western Australia

On 13 May 2022, the Western Australian Government’s budget for the 2022/23 financial year was handed down. The budget’s key highlights are:

Stamp Duty

• Transfer duty reduction:  From 1 July 2022, the general rate of transfer duty will be reduced to be equivalent to the rate for residential transactions.
• For dutiable transactions with a dutiable value of:
  • $120,000 and under, transfer duty will be $1.90 per $100 or part thereof.
  • $120,001 to $150,000, transfer duty is $2,280 plus $2.85 per $100 or part thereof above $120,000.
  • $150,001 to $360,000, transfer duty is $3,135 plus $3.80 per $100 or part thereof above $150,000.
  • $360,000 to $725,000, transfer duty is $11,115 plus $4.75 per $100 or part thereof above $360,000.
  • over $725,000, transfer duty is $28,453 plus $5.15 per $100 or part thereof above $725,000.
• Off-the-plan apartment purchase rebate: From 1 July 2022, the current off-the-plan rebate will be increased for purchasers of lower value dwellings. 
  • Eligible purchasers will receive a rebate of 100% of their duty payable for a dwelling valued less than $500,000 and between 100% and 50% for dwellings valued between $500,000 and $600,000.  For dwellings valued above $600,000, the existing rebate of 50% will continue to apply.
  • The rebate will end on 24 October 2023 and the maximum cap will remain at $50,000 until its expiry.  

Payroll Tax

• Increase to quarterly payroll tax return threshold:  From 1 July 2022, quarterly payroll tax return lodgement threshold will increase from $100,000 to $150,000.  Changes will allow payroll taxpayers with a liability of above $100,000 and up to $150,000 the opportunity to pay payroll tax quarterly.

Land Tax

• Removal of surcharge for paying land tax in three instalments:  From 1 July 2022, the Western Australian Government will abolish the 2% surcharge on assessed land tax liability when paid over three instalments.
• 50% reduction for new build-to-rent projects:  On 1 July 2023, a 50% land tax concession for new eligible build-to-rent developments will be available.  The aim is to provide an incentive to developers to boost supply of properties available to rent.  This is similar to concessions in New South Wales, Victoria, and South Australia.

Other Announcements

• Motor vehicle duty:  Motor vehicle duty will no longer be required for service demonstrator vehicles, vehicles that are returned to the seller due to fault, and vehicles transferred as part of Family Court Orders.
• Duty on prospecting licences: From 1 July 2022, duty on prospecting licences and derivative mining rights in relation to prospecting licences will be removed, unless they are transferred with other dutiable property.
• Future Road User Charge for zero or low emission vehicles:  A distance-based road user charge for all zero or low emission vehicles will apply in Western Australia from 1 July 2027.  This rate, which is based on today’s prices of 2.5 cents/km, will apply to battery electric vehicles and hydrogen vehicles. The equivalent rate for plug-in hybrid vehicles will be 2 cents per km. Both rates will be indexed to CPI from 1 July 2022.
• Rebate on zero or low emission vehicles:  $3,500 rebates are available to support the transition to zero or low emission vehicles.  This is based on the purchase price of the vehicle.

Tasmania

On 21 June 2022, the Tasmanian Government’s budget for the 2022/23 financial year was handed down.  The budget’s key highlights are:

Stamp Duty

• First Home Buyer and Pensioner Duty Concessions:  Alongside the budget, the Tasmanian Government has also announced that the eligible period for the First Home Buyer and Pensioner duty concessions will be extended by a further 12 months to 30 June 2023.  The dutiable value cap is also being increased from $500,000 to $600,000, with the new cap to apply retrospectively from 1 January 2022.

Land Tax

• Changes to land tax rates and thresholds applying as of 1 July 2022:  The tax-free threshold has been doubled to $100,000 and the upper tax threshold has increased to $500,000.  The tax rate applying to land valued between $100,000 and $500,000 has been reduced from 0.55% to 0.45%. 
• Foreign investor land tax surcharge:  A 2% surcharge will apply to residential land that is not used as a principal place of residence and is acquired by a foreign person on or after 1 July 2022. 

Payroll Tax

• Youth employees, apprentice and trainee rebate scheme:  The payroll tax rebate scheme for youth employees and for apprentices and trainees has been extended for two years from 1 July 2022 to 30 June 2024.

 Other Announcements

• Zero and low emissions vehicles: In 2021-22, the government announced it would introduce a road user charge for zero and low emission vehicles from 1 July 2027 or when zero and low emissions vehicles comprise 30% of all new vehicle sales. Legislation is expected to be introduced by the government in 2023.

Australian Capital Territory

 On 2 August 2022, the ACT Government’s budget for the 2022/23 financial year was handed down.  The budget’s key highlights are:

Conveyance (Stamp) Duty

• Threshold for Conveyance Duty: As part of the ACT’s progressive abolishment of stamp duty, the lowest conveyance duty tax threshold for residential owner-occupiers will increase from $200,000 to $260,000.

Payroll Tax

• There were no announcements in relation to payroll tax.

Land Tax

• There were no announcements in relation to land tax.

Other Announcements

• Vehicle Emissions Reduction Scheme:  As part of their Zero Emissions Vehicles Strategy, the ACT Government will continue to waive or reduce stamp duty on the registration or transfer of zero or low emissions vehicles.
• Betting Operations Tax:  The Betting Operations Tax has increased from 15% to 20% for all revenue over $150,000 per financial year from 1 July 2022.
• Build-to-Rent:  The ACT Government will provide a time limited Lease Variation Charge (LVC) discount to eligible Build-to-Rent developments that include a minimum of 15% of dwellings as affordable rental. The affordable rental dwellings must be managed by a registered Community Housing Provider for at least 15 years. The discount is proportional to the affordable rental component of the development. Developments with 50% or more affordable rental dwellings could be eligible to pay no LVC.  

Northern Territory

On 10 May 2022, the Northern Territory Government’s budget for the 2022/23 financial year was handed down.  The budget’s key highlights are:

Stamp Duty

• Stamp duty exemption:  From 1 July 2022, an exemption from stamp duty for eligible individuals who acquire newly-developed land from a registered building practitioner on which there is, or will be, a home constructed by the builder, available for five years.
• Stamp duty concession for electric and hybrid vehicles:  A stamp duty concession of up to $1,500 will apply from 1 July 2022 on the registration of new and second-hand battery electric vehicles and plug-in hybrid electric vehicles. The concession will be available for five years. These vehicles are also exempt from the registration component of vehicle registration fees.

Land Tax

• The NT does not impose land tax.

Payroll Tax

• There were no announcements in relation to payroll tax.

Other Announcements

• Property activation levy:  The property activation levy, which imposed a charge on vacant land and unoccupied buildings in the Darwin CBD will cease from 1 July 2022. However there will retain an obligation to lodge and pay returns for 2021-22 financial year.  This is because Government analysis concluded that the levy has achieved its purpose in incentivising investment in underutilised land and buildings within the Darwin CBD.

If you have any queries please contact Kathryn Bertram.

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).