Changes to state taxes November 2016
The State Taxation Acts Further Amendment Act 2016 received Royal Assent on 15 November 2016. It introduces changes to the Land Tax Act 2005, Payroll Tax Act 2007, Planning and Environment Act 1987, and Valuation of Land Act 1960.
Land Tax Act 2005
The relevant date for valuations of non-rateable non-leviable land will be aligned with the relevant date for valuations of rateable and non-rateable leviable land. In most cases, the relevant date for a valuation of non-rateable non-leviable land will now be 1 January every even calendar year, consistent with the local government general valuation cycle.
The land tax rate table for absentee trusts with taxable land holdings between $250,000 and $600,000 has been corrected to 2.075% for the 2017 land tax year. This is the rate that was intended to apply.
These amendments commence on 1 January 2017 and apply to the 2017 land tax cycle.
Payroll Tax Act 2007
The exempt rate for motor vehicle allowances paid to employees has been updated to ensure that the payroll tax exemption continues to operate as intended and aligns with the deduction rate determined under the Commonwealth income tax legislation.
The exempt rate for the 2016-17 payroll tax year is 66 cents per kilometre and applies from 1 July 2016 to ensure employers are able to benefit from the exemption across the entire 2016-17 tax year.
Planning and Environment Act 1987
A landowner who subdivides land for the sole purpose of setting aside land for a public purpose will be required to pay the Growth Areas Infrastructure Contribution (GAIC) liability attributable to the public purpose land within three months of the statement of compliance being issued.
The GAIC attributable to the balance of the land will not be triggered until a subsequent GAIC event occurs. This could be, for example, a transfer of land, a subsequent subdivision or issue of a building permit.
The Planning and Environment Act 1987 is amended to ensure that when land subject to the GAIC (or a deferred GAIC liability) is subdivided, the GAIC (or deferred liability) can be apportioned between the new lands in the resulting child titles.
The exemption that applied to compulsory acquisitions of land by public authorities or municipal councils has been removed to ensure the new provisions apply equitably across all landowners.
Valuation of Land Act 1960
There are a number of amendments to the Valuation of Land Act 1960:
- Local councils must include the Australian Valuation Property Classification Code in a notice of valuation from the 2018 valuation cycle,
- The Valuer-General can accept a late nomination to undertake land valuations for non-rateable leviable lands, and
- The definition of "general valuation" has been clarified
Changes to state taxes June 2016
The State Taxation and Other Acts Amendment Act 2016 (the Amending Act) received Royal Assent on 28 June 2016 and introduces changes to various Acts, including revenue initiatives announced in the 2016-17 Victorian Budget.
The amended Acts are the Duties Act 2000, Fire Services Property Levy Act 2012, First Home Owner Grant Act 2000, Land Tax Act 2005, Mineral Resources (Sustainable Development) Act 1990, Payroll Tax Act 2007, Planning and Environment Act 1987 and Taxation Administration Act 1997.
Duties Act 2000
Foreign purchaser additional duty will increase from 3 per cent to 7 per cent for contracts, agreements and arrangements entered into on or after 1 July 2016.
The additional duty will continue to apply in addition to any land transfer duty or land holder duty already payable by the foreign purchaser. Foreign purchasers will continue to have access to the same exemptions and concessions that were available prior to the increase, including the Treasurer’s discretion to exempt certain foreign companies and trusts from paying the surcharge if they contribute to the supply of housing stock in Victoria.
Land Tax Act 2005
The land tax surcharge rate payable by an absentee owner of taxable land will increase from 0.5 per cent to 1.5 per cent on 1 January 2017.
Absentee owners will continue to have access to the same exemptions and concessions that were available prior to the increase, including the Treasurer’s discretion to exempt certain absentee companies from paying the surcharge in certain circumstances.
The primary production land tax exemption has been extended to land owned by a family superannuation fund where:
- The fund is a complying or regulated superannuation fund for the purposes of Commonwealth legislation,
- All the members or beneficiaries of the superannuation fund are relatives, and
- At least one member or beneficiary is normally engaged in a substantially full time capacity in the business of primary production of the type conducted on the land
Payroll Tax Act 2007
The payroll tax threshold of $550,000 will increase by $25,000 annually to $650,000 by 2019-20, commencing on 1 July 2016.
- For the 2016-17 financial year, the threshold will be $575,000
- For the 2017-18 financial year, the threshold will be $600 000
- For the 2018-19 financial year, the threshold will be $625,000
- For the 2019-20 financial year, the threshold will be $650,000
A new exemption has been introduced for wages paid or payable by an employer to a re-employed (displaced) apprentice or trainee who recommences their apprenticeship or traineeship with the subsequent employer on or after 1 July 2016.
A re-employed apprentice or trainee is defined as an apprentice or trainee:
- Whose initial employment ceased prior to the completion of their apprenticeship or traineeship
- Who has been employed by another employer on or after 1 July 2016, and
- Who is continuing with the same (or superseded) apprenticeship or traineeship
The exemption will be available to each subsequent employer of the apprentice or trainee as they work toward completing their apprenticeship or traineeship. However, an employer who terminates an apprentice or trainee and then re-employs that same person will not be eligible for the exemption.
Similarly, the exemption will not apply to a subsequent employer who constitutes a payroll tax group with the preceding employer of the apprentice or trainee.
Mineral Resources (Sustainable Development) Act 1990
The Mineral Resources (Sustainable Development) Act 1990 has been amended to provide for a threefold increase in the royalty rate for lignite (brown coal) which is administered by the Department of Economic Development, Jobs, Training and Resources. The increased royalty rate will apply from 1 January 2017.
Duties Act 2000
The Duties Act 2000 is amended to clarify that residential property does not include land that is, or will be, commercial residential premises within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), a retirement village within the meaning of the Retirement Villages Act 1986, a residential care facility as defined in section 76 of the Land Tax Act 2005 or supported residential service as defined in the Supported Residential Services (Private Proprietors) Act 2010.
The amended definition also ensures that, where only part of a building is being transferred, the residential test only applies to the part of the building that is the subject of the transfer. These amendments are consistent with existing policy and will not impact on the amount of duty payable.
The Duties Act 2000 is also amended to provide that unpaid duty owed by a foreign purchaser will be a first charge on the land, subject to the following requirements:
- A transferee is liable to pay the foreign purchaser additional duty in respect of a transaction,
- A tax default has occurred in relation to that transaction, and
- The Commissioner has made an assessment or reassessment of the transferee’s duty liability on or after 1 July 2016
Fire Services Property Levy Act 2012
Minor amendments have been made to the Fire Services Property Levy Act 2012 to address issues and anomalies identified during the administration of the scheme. These amendments:
- Update the definition of farm land to clarify that the single farming enterprise exemption applies regardless of whether the farm land is rateable or non-rateable land,
- Update the definition of concession card holder to extend the availability of the concession to former prisoners of war and extreme disablement adjustment veterans, and
- Clarify the formula for calculating the CPI adjusted fixed charge to address an anomaly caused by consequential amendments introduced in 2014
The amendments do not increase the amount of levy payable by Victorian land owners.
First Home Owner Grant Act 2000
A number of amendments to the First Home Owner Grant Act 2000 will help facilitate the efficient and prompt recovery of First Home Owner Grant (FHOG) debts.
The amendments enable the SRO to serve recovery documents by post or email and to recover FHOG debts from third parties that hold money on behalf of the FHOG applicant, such as mortgagees and lessees. These amendments are consistent with the Commissioner’s exercise of recovery powers in relation to other taxes.
The secrecy provisions in the First Home Owner Grant Act 2000 have been amended to permit the SRO to disclose information to the Ombudsman to facilitate the determination of any complaints.
Planning and Environment Act 1987
The Planning and Environment Act 1987 is amended to clarify the formulae for calculating CPI adjusted thresholds and rates for the Metropolitan Planning Levy and Growth Areas Infrastructure Contribution. The amendments do not increase the amount of levy or contribution payable by Victorian taxpayers.
Taxation Administration Act 1997
The Taxation Administration Act 1997 is amended to allow the SRO to disclose information to municipal councils. Under the Fire Services Property Levy Act 2012, the Treasurer may appoint a local council to collect the levy on land outside their municipal boundary.
This amendment allows the SRO to provide those councils with the information they need to collect the levy on land that does not fall within the boundary of any Victorian municipality, such as French Island and the Alpine region.
The Amending Act also makes various miscellaneous amendments to the Land Tax Act 2005 and Taxation Administration Act 1997 to correct minor drafting defects and keep the provisions of Victoria’s state revenue laws up to date. These amendments are consistent with the existing policy intent of the provisions and ensure the integrity of state revenue legislation is maintained.