Changes to state taxes June 2017
The State Taxation Acts Amendment Act 2017 received Royal Assent on 27 June 2017 and introduces changes to various Acts. It includes revenue initiatives announced as part of the Homes for Victorians housing package and in the 2017-18 Victorian Budget.
The Duties Act 2000, First Home Owner Grant Act 2000, Land Tax Act 2005, Payroll Tax Act 2007, Planning and Environment Act 1987, Taxation Administration Act 1997, and Unclaimed Money Act 2008 have all been amended.
Duties Act 2000
The exemption from duty for transfers between spouses/domestic partners is available only for a principal place of residence transfer from 1 July 2017. The exemption no longer applies to transfers of investment or commercial properties between spouses/domestic partners. The exemption for transfers of property following a relationship breakdown has not been altered or removed. It continues to apply to all properties, including investment and commercial properties.
The rate of motor vehicle duty for new (and near new) passenger vehicles which do not exceed the luxury car tax threshold will be $8.40 per $200 from 1 July 2017. This aligns with the rate of duty which applies to used cars. The luxury car tax threshold for 2017-18 is $65,094.
Insurance taken out for 'agricultural products' is exempt from insurance duty from 1 July 2017. This covers insurance for different types of crops, livestock and for various assets used as part of primary production activity.
First Home Owner Grant Act 2000
Australian Defence Force personnel are exempt from the first home owner grant residency requirement from 27 June 2017. The exemption applies to current members of the Australian Army, Air Force or Navy who are enrolled to vote in Victorian elections and are either on duty or leave. The exemption does not apply to Australian Army, Air Force or Navy reservists or to Australian Public Service staff.
Payroll Tax Act 2007
Previously announced payroll tax threshold increases have been brought forward by 12 months. The threshold for 2017-18 is $625,000. The threshold will be increased to $650,000 for 2018-19.
A reduced payroll tax rate of 3.65 per cent is available to qualifying regional businesses from 1 July 2017. A regional business is a business with an ABN registered in regional Victoria which pays at least 85 per cent of its taxable wages to regional employees. Regional Victoria has the same meaning as it does for the purposes of the first home owner grant.
Homes for Victorians announcements
Duties Act 2000
Land transfer duty has been abolished for first-home buyers who purchase a property valued at or below $600,000 and phased in for properties valued up to $750,000. The exemption and concession apply to dutiable transactions arising from a contract entered into on or after 1 July 2017.
The off-the-plan duty concession is restricted to properties acquired by owner/occupiers who are eligible for the principal place of residence or first home buyer duty concessions. The concession is no longer available for residential investment property purchases or commercial property purchases. These changes apply where the contract is entered into on or after 1 July 2017.
First Home Owner Grant Act 2000
The First Home Owner Grant (FHOG) has been doubled to $20,000 for new home purchases in regional Victoria. First-home buyers of new homes in metropolitan Melbourne will continue to receive the $10,000 FHOG amount.
The $20,000 FHOG is available to first-home buyers who purchase a new home valued up to $750,000 in regional Victoria. The property must be used as their primary place of residence for a continuous period of 12 months, commencing within 12 months of completing the eligible transaction. It applies to contracts entered into from 1 July 2017 to 30 June 2020.
Land Tax Act 2005
From 1 January 2018, vacant residential properties in the inner and middle ring of Melbourne will be subject to a vacant residential land tax of 1 per cent of the property’s capital improved value.
A property will be considered vacant if it is unoccupied for six months or more in a calendar year. The six months does not need to be continuous. Land owners will be required to notify the Commissioner in writing by 15 January if they own vacant residential land in the previous year.
Existing land tax exemptions may apply to vacant residential land but there are some new exemptions which apply solely for the purposes of the vacant residential land tax. These exemptions include holiday homes, city properties used for work purposes, property transfers during the year and new residential properties.
Transitional arrangements will be in place for the 2018 tax year. All properties will be deemed 'occupied' for the purpose of this tax for the period January to April 2017 (inclusive) to give property owners sufficient time to consider the impact and adjust their behaviour accordingly.
Duties Act 2000
Amendments have been made to:
- Remove the requirement for statutory declarations to be lodged with the Commissioner for off-the-plan transactions or sub-sale arrangements, and consequently increases the penalties for providing false or misleading information.
- Close certain loopholes in the sub-sale arrangement provisions. The amendments:
- provide a new mechanism to calculate the duty payable on a sub-sale transfer where partial interests are acquired,
- ensure a sub-sale arrangement cannot obtain multiple exemptions that result in less than 100 per cent duty being payable on the transfer,
- insert new provisions to ensure option arrangements where additional consideration is given to acquire the transfer right are dutiable, and
- remove the reference to 'excluded costs' in the provisions that determine the dutiable value of a subsequent transaction.
- Recognise the New York Stock Exchange and the London Stock Exchange as acceptable exchanges for public landholder status and allow exchanges that choose not to be a member of the World Federation of Exchanges, but would nevertheless meet all relevant criteria for membership, to be an acceptable exchange for public landholder status under the landholder provisions without the need for future legislative amendment.
Planning and Environment Act 1987
The Planning and Environment Act 1987 has been amended so the CPI adjusted metropolitan planning levy threshold amount can be rounded to the nearest $1000.
Taxation Administration Act 1997
The Taxation Administration Act 1997 has been amended to:
- Make Part 6 of the Livestock Disease Control Act 1994 and any regulations made under that Act a taxation law. This allows data obtained in the administration of livestock duty to be used for the administration of Victoria's taxation laws generally.
- Increase the statutory maximum penalty for offences relating to false and misleading statements and omissions.
- Authorise the collection and disclosure of information about transfers of interests in real property for the purposes of reporting to the Commissioner of Taxation of the Commonwealth.
- Authorise the disclosure of information by taxation officers for verification purposes.
- Enable the vacant residential land tax to be administered in the same way as other land taxes.
Unclaimed Money Act 2008
It is now an offence under the Unclaimed Money Act 2008 for a person to provide false or misleading information in relation to a claim for unclaimed money listed in the register. The offence provisions for giving false or misleading information have been updated accordingly and there is an increase in the statutory maximum penalty.