State and Territory budget snap shot - wrap up of key business announcements

On 19 September 2023, New South Wales was the last Australian state to hand down its 2023/24 budget.  We outline the key business taxation measures announced in each Australian State and Territory below. Generally speaking, a focus of the measures announced by the States and Territories has been to address cost of living pressures and housing shortages. Victoria and NSW have introduced the most new taxes, with Victoria increasing payroll tax and land tax and NSW announcing an increase to coal royalty rates, replacing the corporate reconstruction exemption with a 90% concession and making various amendments to landholder duty that will increase the amount of duty payable.

Some key announcements in the budgets include:

• New South Wales increasing coal royalties by 2.6%, announcing the corporate reconstruction exemption will be replaced by a concessional rate of duty charged at 10% of the duty otherwise payable and reducing the threshold for the acquisition of a significant interest in a private unit trust from 50% to 20%;
• Victoria announcing that stamp duty for commercial and industrial properties will be phased out from 1 July 2024;
• Queensland introducing a number of payroll tax initiatives, including extending a regional rate discount and apprentice and trainee rebate as well as introducing an amnesty for medical practices until 30 June 2025;
• the Northern Territory abolishing most stamp duty on non-land property; and
• Build-to-Rent initiatives being introduced in Queensland (land tax and stamp duty), South Australia (land tax), Western Australia (land tax) and the ACT.

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

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

New South Wales

The New South Wales government released its budget on 19 September 2023. We outline the key changes here.

Victoria

On 23 May 2023, the Victorian Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights can be found here – Recent Victorian tax announcements – what do you need to know?

Queensland

On 13 June 2023, the Queensland Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Payroll Tax

• Payroll tax regional rate discount extended: The 1% discount on the payroll tax rate for eligible employers has been extended to 30 June 2030. The discount applies to employers who have an ABN registered business address in regional Queensland and pay at least 85% of their taxable wages to employees located outside South East Queensland.
• Apprentice and Trainee Payroll Tax Rebate Extension: The 50% payroll tax rebate on apprentice and trainee wages will be extended to 30 June 2024.
• Medical Practice Payroll Tax Amnesty: A payroll tax amnesty has been offered to qualifying medical practices, allowing them to avoid paying payroll tax on payments made to contracted general practitioners (GPs) until 30 June 2025.  The Queensland Government states that the amnesty aims to support compliant practices and acknowledges potential lack of awareness among GPs regarding the payroll tax treatment of contractors.

Land Tax

• Build-to-Rent:  The Queensland Government has proposed land tax concessions for Build-to-Rent (BTR) developments to enhance rental property affordability. The proposal introduces a requirement that at least 10% of constructed dwellings must be offered at discounted rents (at least 25% below market rent) to eligible tenants.  Further details include: 
  • Eligible tenants are defined based on income and asset tests. Other criteria include that the BTR development must have at least 50 self-contained dwellings (with at least five having discounted rents), be owned under a unified ownership structure and managed by a single entity, and being occupied or available for residential tenancy agreements without restrictive occupancy terms.
  • The qualifying BTR development can benefit from a 50% reduction in taxable land value for land tax and a 100% reduction in taxable land value for land tax foreign surcharge.
  • The concessions are applicable starting from 1 July 2023 for a maximum of 20 years or until 30 June 2050 (whichever comes sooner), with construction completion and suitability for occupation required by 30 June 2030.

Stamp Duty

• Build-to-Rent discount: A qualifying BTR development can benefit from a 100% discount on additional foreign acquirer duty for land for a build-to-rent development.
• Ex-gratia relief:  Australian-based foreign corporations or trusts which undertake significant development works which contribute to the supply of housing stock in Queensland may be eligible for ex-gratia relief from the additional 7% foreign acquirer duty.

South Australia

On 15 June 2023, the South Australian Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Payroll Tax

• There were no significant announcements in relation to payroll tax.

Land Tax

• Build-to-Rent Land Tax (BTR) Concessions: The South Australian Government announced in February 2023 that it intends to introduce a land tax concession for eligible BTR developments. The concession entails a 50% reduction in the taxable value of the land for qualifying developments and will be available where construction commences on or after 1 July 2023. This concession is available until the conclusion of the 2039-40 financial year.

Stamp Duty

• Abolition of stamp duty for eligible first home buyers: The South Australian Government has announced the abolition of stamp duty for eligible first home buyers purchasing a new home or vacant land for building a new home. For eligible new homes valued up to $650,000, no stamp duty will be payable. Relief will phase out gradually for properties valued up to $700,000. For vacant land, no stamp duty will be payable on land purchased for building a new home valued up to $400,000. Relief will phase out progressively for land valued up to $450,000. The relief will apply to first home buyers who enter into a contract to purchase a new home or vacant land for building a new home from 15 June 2023 onwards. To be eligible for the relief, the buyer must intend to occupy the new home as their primary residence.

Western Australia

On 11 May 2023, the Western Australian Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Payroll Tax

• There were no significant announcements in relation to payroll tax.

Land Tax

• Build-to-Rent:  Although not included in the Budget, the Land Tax Assessment (Build-to-Rent) Bill 2023 (WA) was introduced into Parliament on 17 May 2023. The Bill, if passed, will grant a 50% land tax exemption for land used in eligible new Build-to-Rent developments effective from 1 July 2023. To qualify for the exemption:
  • the land must be owned by the same owner/group and managed by one management entity;
  • the development must construct or substantially renovate at least 40 self-contained dwellings for lease under a residential tenancy agreement;
  • all dwellings must become legally occupiable between 12 May 2022 and 30 June 2032 and be available for rent for a minimum of three years; and
  • there should be no restrictions on the classes of people who can rent the dwellings, unless necessary for public health/safety or if the dwellings are social housing or in  other prescribed circumstances.

If the eligibility requirements are met and maintained, up to 50% of the taxable value of the land will be exempt from land tax for the next 20 financial years, with proportional reductions for land areas used for other purposes, such as commercial activities.

However, if the eligibility requirements are not met within the first 15 years, the exemption is removed retroactively, and the owner is required to pay the land tax that was previously forgone due to the exemption.

Stamp Duty

• Off-the-plan transfer duty rebate:  The current off-the-plan rebate for lower value dwellings, previously due to expire in October 2023, will be extended to 30 June 2025. The rebate has been converted to a legislated duty concession from 31 August 2023, and the property price thresholds have been lifted.  Eligible contracts will receive transfer duty assistance (including any Foreign Transfer Duty) equal to 100% of the duty payable for properties valued up to $650,000, phasing to 50% assistance for properties valued at or over $750,000 (capped at $50,000).

Tasmania

On 25 May 2023, the Tasmanian Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Payroll Tax

• Payroll Tax Rebate Scheme: The government had previously announced an extension of the Payroll Tax Rebate Scheme, which provides relief to businesses that employ apprentices, trainees and youth employees, to 30 June 2024.
• Tax free threshold exemption to be increased: The government announced that there would be an increase in the tax-free threshold exemption for payroll tax in order to reflect the strong labour market conditions in Tasmania. No further details on this announcement have been released.

Land Tax

• Land tax exemptions extended:  The land tax exemptions for newly constructed dwellings made available for long-term rental and short-stay accommodation which are converted to long-term rentals have been extended for a further 12 months to 30 June 2024.

Stamp Duty

• Extended duty concessions:  The first home buyer and pensioner downsizing duty concessions will be extended to 30 June 2024.
• Extended duty waiver for new electric and hydrogen fuel-cell vehicles: If the contract for the purchase of new electric and hydrogen fuel-cell vehicles was entered into before 25 May 2023, the duty waiver will be extended to 31 December 2023.

Other Announcements

• Road User Charge: The Tasmanian Government plans to introduce legislation in 2024 that would impose a road user charge on zero and low emission vehicles. The charge would come into effect either on 1 July 2027 or when these vehicles constitute 30% of all new vehicle sales, whichever occurs earlier. However, the implementation of this measure is dependent on the outcome of the Vanderstock constitutional challenge, which is currently being considered by the High Court.

Australian Capital Territory

On 27 June 2023, the ACT Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Conveyance (Stamp) Duty

• Off-the-plan concession:  From 1 July 2023, the owner occupier (off-the-plan) conveyance duty concession property price will increase from $600,000 to $700,000.
• Rate reduction:  The lowest conveyance duty tax rate will see a reduction to 0.49% in 2023/24 from 0.6% in 2022/23.

Payroll Tax

• Large business surcharge:  From 1 July 2025, large businesses will be subject to a payroll tax surcharge as follows:
  • Businesses with Australia-wide wages above $50 million will be subject to a payroll tax surcharge of 0.25% on ACT wages after they exceed the threshold; and
  • Businesses with Australia-wide wages above $100 million will be subject to a 0.5% surcharge on ACT wages after they exceed the threshold.

Land Tax

• There were no significant announcements in relation to land tax.

Other Announcements

• Build-to-Rent: The government has established a $60 million Affordable Housing Project Fund to expand the social and affordable housing stock in the ACT. Further details will be released once specific projects have been negotiated.  

Northern Territory

On 9 May 2023, the Northern Territory Government’s budget for the 2023/24 financial year was handed down. The budget’s key highlights are:

Stamp Duty

• Abolition of duty on non-land property: Effective from 9 May 2023, duty has been abolished on:
  • the conveyance of non-land property, except for chattels conveyed with an interest in land; and
  • the transfer of chattels conveyed with a lease that has nil or nominal dutiable value.

Payroll Tax

• There were no significant announcements in relation to payroll tax.

Land Tax

• The NT does not impose land tax.

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).