The Victorian State Budget was handed down by Tim Pallas yesterday. Victoria has recorded a deficit of $17.4 billion in the 2020-21 financial year and is forecast to remain in a shortfall until at least 2025, according to the State Budget. However, the eye-watering number is not as high as originally forecast last year, with a $23.3 billion deficit initially predicted in November. The reduced deficit means Victoria has rebounded from the crippling economic effects of the COVID-19 pandemic better and quicker than expected. Here is our summary of what may impact you…
- Mental health and wellbeing levy (payroll tax surcharge).
- A payroll tax surcharge will be applied on wages paid in Victoria by businesses with national payrolls over $10 million a year. The levy is expected to commence from 1 January 2022.
- A rate of 0.5% will apply for businesses with national payrolls above $10 million
- Businesses with national payrolls above $100 million will pay an additional 0.5%.
- The increase in the payroll tax threshold to $700,000 will be brought forward to 1 July 2021.
- The reduction in the regional employer payroll tax rate to 1.2125% will be brought forward to 1 July 2021.
Windfall Gains Tax
A new windfall gains tax of up to 50% to be applied to planning decisions to rezone land from 1 July 2022. The total value uplift from a rezoning decision will be taxed at 50% for windfalls above $500,000, with the tax phasing in from $100,000. This is expected to commence from 1 July 2022.
Land Transfer Duty
- A new premium land transfer duty (stamp duty) rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million. This will apply to contracts entered into on or after 1 July 2021.
- A temporary land transfer duty (stamp duty) concessions for new residential property within the City of Melbourne local government area with a dutiable value up to $1 million.
- A 50% concession will be available for new residential properties.
- The concession applies to contracts entered into on or after 1 July 2021 and on or before 30 June 2022.
- A full exemption will be available for new residential properties that have remained unsold for 12 months or more since completion of construction.
- The exemption applies to contracts entered into on or after 21 May 2021 and on or before 30 June 2022.
Temporary Increase in Threshold for Off-The Plan Duty Concession
A temporary increase in the eligibility threshold for the off-the-plan duty concession to $1 million for all home buyers. This will apply to contracts entered into on or after 1 July 2021 and on or before 30 June 2023.
Land Tax Changes
There are a number of changes in this space:
- The land tax rates for high value landholdings will increase from the 2022 land tax year:
- for taxable landholdings exceeding $1.8 million — the land tax rate will rise by 0.25 percentage points, and
- for taxable landholdings exceeding $3 million — the land tax rate will rise by 0.30 percentage points.
- The general land tax threshold will increase from $250,000 to $300,000. (The land tax threshold for land held on trust remains unchanged at $25,000.). This will increase from the 2022 land tax year.
- The vacant residential land tax exemption for new developments will be extended to apply for up to two tax years. This will be extended from the 2022 land tax year.
- The land tax concessions for private gender exclusive clubs will be removed from the 2022 land tax year.
The full Budget papers are available here.
Please reach out to our team should you have any questions and we will endeavour to do our best to assist.
The team at Rose Partners