Legal Insights

Legislation update – State Taxation Amendment Act (2019)

By Michael Taylor-Sands

• 17 September 2019 • 2 min read

The State Taxation Acts Amendment Act (2019) has introduced other changes to duties, land tax, payroll tax and land valuations which developers should be aware of.

In addition to the changes to the economic entitlement rules, the State Taxation Acts Amendment Act (2019) introduced a number of other changes to duties, land tax, payroll tax and land valuations which developers should be aware of. This includes the following:

Duties

  • The foreign purchaser additional duty rate increased from 7 percent to 8 percent, meaning the rate of duty for foreign purchasers of residential property will increase to 13.5 percent overall. The new rate applies to contracts entered into on or after 1 July 2019.
  • A significant change in the corporate reconstruction duty A full duty exemption is no longer available, but instead replaced by a concessional rate of duty (10 percent of the duty otherwise payable, so a 90 percent concession). The provisions were also changed to widen the eligibility criteria.
  • Fixtures of significant value (valued over $2 million) transferred independently of the underlying land are now subject to duty. This applies to arrangements entered into on or after 19 June 2019.
  • A duty concession for transfers of commercial and industrial properties in regional Victoria will be progressively introduced (up to a 50 percent concession by 1 July 2023).

Land tax

  • The absentee owner surcharge rate will increase from 1.5 percent to 2 percent for the 2020 land tax year.
  • The principal place of residence land tax exemption for contiguous land on a separate title will be limited to properties in regional Victoria from the 2020 land tax year.

Payroll tax

  • The Victorian payroll tax-free wage threshold will be progressively increased from $650,000 to $700,000 by 1 July 2022.
  • The payroll tax rate for regional employers will be progressively reduced to 1.2125 percent by 1 July 2022, and the definition of a regional employer has been amended.
  • The payroll tax exemption for wages paid to employees on maternity leave has been expanded to all types of parental leave.

Land valuations

  • A simplified methodology has been introduced for determining the site value of buildings listed on the Victorian Heritage Register.

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