Entry into the reform for commercial and industrial properties

Description

Properties will enter the commercial and industrial property tax reform if there is an eligible dutiable transaction or relevant acquisition, defined in the legislation as an entry transaction, if certain conditions are met.

Transcript

From 1 July 2024, commercial and industrial property in Victoria is moving from land transfer duty, otherwise known as stamp duty, and landholder duty, to an annual tax – the commercial and industrial property tax.

Commercial and industrial properties do not automatically enter the CIPT reform.

Properties will enter the reform if there is an eligible dutiable transaction or relevant acquisition, defined in the Act as an ‘entry transaction’ if certain conditions are met, including:

• the transaction happens on or after 1 July 2024
• the property has a qualifying commercial or industrial use when the transaction happens
• the transaction relates to a 50% or more interest in the property, and
• the transaction is not eligible for an exemption from duty (or a corporate reconstruction or consolidation concession from duty).

Some complex transactions are excluded from being an ‘entry transaction'.

Commercial and industrial properties can also enter the reform in limited other circumstances, including if a property is part of certain types of subdivisions or consolidations of titles.

If you buy a commercial or industrial property that results in the property entering the CIPT reform, you will generally have a choice to pay your stamp duty liability as an upfront lumpsum or finance your stamp duty liability through a government-facilitated transitional loan.

For further details on the transitional loan, please visit the Treasury Corporation of Victoria website.

Generally speaking, if the property is sold again, then no land transfer duty will be payable on that subsequent transaction if the property continues to be used for commercial and industrial purposes.

Duty consequences may arise if the entry transaction was for the acquisition of a partial interest and the subsequent transaction occurs within 3 years.

For more information about the commercial and industrial property tax and what it means for you, visit our website: sro.vic.gov.au/cipt