The Victorian Budget 2020-21 included a number of announcements affecting taxes and duties payable by both businesses and individuals. Many of the announcements needed clarification which even today in February still need further refinement before being legislated.
Following a significant delay in what has been a severely disrupted year, the Victorian Government delivered its State Budget for 2020-21 back on 24 November 2020. The Budget made headlines delivering both record spending and tax cuts, and a record budget deficit forecast. The Government’s stated aim of this Budget is to “repair, recover, and make us stronger than before”.
On the taxation & duties front, the Victorian Government has taken a different approach to that of the NSW Government, relying on major tax cuts to kick-start the Victorian economy following a long pandemic lockdown rather than announcing major tax reforms such as those proposed north of the border.
The precise detail of the above measures has not been legislated, therefore the detail is not yet available. It appears likely that the temporary stamp duty waiver for properties under $1 million will be affected by way of a Treasurer’s direction to the Commissioner for emergency tax relief measures, although one might expect an 18-year land tax discount regime to be legislated. If usual tax cycles are followed (after a highly unusual year), the build-to-rent measures may not be legislated until around May 2021 at the earliest, and the industry may need to agitate for earlier clarity on the eligibility criteria.
The measures are listed here, along with their expected start date:
A payroll tax credit by giving a credit of 10cents per extra dollar spent on wages when compared with the previous financial year for businesses with payrolls less than $10 million whose Victorian taxable wages increase in 2020-21 and 2021-22 — applies to the 2020-21 and 2021-22 payroll tax years
An increase in the annual reporting threshold, from $40,000 to $100,000, for businesses registered for payroll tax in Victoria — expected start date 1 July 2021.
A 50% land tax discount for eligible build-to-rent developments, including an exemption from the absentee owner surcharge, until 1 January 2040 — expected start date 2022 land tax year.
A land tax exemption for land owned and occupied by not-for-profit clubs that provide for the social, cultural, recreational, literary or educational interests of their members — expected start date 2021 land tax year.
Changes previously announced but confirmed in the Budget were extensive technical amendments to the principal place of residence exemptions. A key change is that any absence from the principal place of residence will lead to loss of the exemption where any income is earned from the property during a year (i.e., short-term on-line rentals or full rentals). Previously, rentals could occur for up to six months without impacting the exemption.
Land Transfer (stamp) Duty
Bringing forward the 50% land transfer (stamp) duty concession for commercial and industrial properties in regional Victoria — applies to contracts entered into on or after 1 January 2021.
A land transfer (stamp) duty waiver of up to 50% on purchases of residential property in Victoria with a dutiable value of up to $1 million — applies to contracts entered into on or after 25 November 2020 and before 1 July 2021.
Should you have any questions in relation to the above, please contact your Nexia Advisor.