The various Property-related tax measures announced in the Victorian State Government Budget will now become law.
The State Taxation and Mental Health Acts Amendment Bill 2021 (the Bill) has passed Victorian Parliament and is currently awaiting Royal Assent.
The most contentious measures included in the Bill are the introduction of a premium stamp duty for properties over $2m, and an increase in land tax for property holdings of $1.8m or more.
Measures to become law
Detailed below are the following measures introduced by the Bill:
Stamp Duty
- the threshold for the off-the-plan concession will temporarily increase to $1m for contracts entered into from 1 July 2021 to 30 June 2023;
- a premium duty rate of 6.5% will apply to dutiable transactions with a value above $2m from 1 July 2021;
- there will be a temporary stamp duty exemption and concession for the transfer of new homes (i.e. new residential premises) in the City of Melbourne with a dutiable value of up to $1m:
- a full exemption will apply for the transfer of a new home that has been in existence for at least 12 months prior to the contract to purchase the home being entered into. The exemption applies to contracts entered into between May 2021 and 30 June 2022 inclusive; and
- a 50% concession will apply for the transfer of a new home which has not been in existence for at least 12 months. The concession applies to contracts entered into between 1 July 2021 to 30 June 2022 inclusive.
The 12-month period will commence once an occupancy permit has been issued. In order to be a ‘new home’ under this measure, the subject property cannot have been previously sold, occupied as a place of residence or occupied for the provision of short-term accommodation.
Land Tax
- the land tax rates for taxpayers with property holdings of $1.8m or more will increase by 0.25 percentage points, and for landholdings over $3m the rate will rise by 0.30 percentage points;
- the land tax threshold is increased from $250,000 to $300,000 for owners and absentee owners; and
- the exemption for vacant residential land tax for new developments will be extended to apply for up to 2 land tax years.
The Bill contains other land tax measures, including providing that a partner in a partnership is taken to have a beneficial interest in partnership property, and excluding unit trust schemes from the definition of ‘discretionary trust.’
The Bill does not include the controversial ‘windfall gains tax’, a new tax that will apply to large windfall gains associated with planning decisions to rezone land. We understand that the Government will be consulting with industry prior to introducing this measure, and we hope this will lead to some moderation of the measures following the original announcement.
For completeness, we note the Bill also introduces a mental health and wellbeing payroll tax surcharge of 0.5% on wages paid in Victoria by employers with total taxable and interstate wages of $10m or more.
Further detail on the Budget announcements are available here.
If you would like to discuss the above Budget measures and how they will affect you, please contact the Tax or Property team.
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