20/21 State Budgets – Stamp duty changes in NSW and Victoria

The State Governments of New South Wales and Victoria have recently announced shake-ups to their respective stamp duty regimes as part of their 2020-21 State Budgets, with NSW in particular proposing significant changes to property transfer taxes.

NEW SOUTH WALES PROPERTY TAX

On 17 November 2020, the New South Wales State Government announced a proposal to transition NSW to a property tax system, gradually replacing stamp duty and land tax (where applicable). The property tax would be levied on the unencumbered land value, with the rates applying on a tiered basis to different types of property.

The proposal will affect:

• commercial property;
• residential property (both owner-occupied and investment); and
• primary production land.

The property tax will be an “opt-in” system, where upon purchasing a property the purchaser would elect to pay either the ongoing property tax or a stamp duty and land tax (where applicable).

However, certain properties will be exempt from opting-in – with the most valuable commercial and residential property remaining under the existing stamp duty and land tax system initially to ensure continuity of taxation revenue.

The proposal is subject to public consultation until 15 March 2021, the results of which will be announced mid-2021.

The proposed changes are outlined in more detail on the Herbert Smith Freehills website.

VICTORIA STAMP DUTY CONCESSIONS

On 24 November 2020, the Victorian State Government announced new concessions and changes to the rates of stamp duty (and land tax), partly as a measure to reinvigorate the State economy.

Stamp duty changes are to bring forward to 1 January 2021 a 50% stamp duty concession for commercial and industrial properties in regional Victoria, which were originally due to commence from 1 July 2023.

Furthermore, the Victorian State Government will introduce stamp duty waivers for contracts entered into between 25 November 2020 and 1 July 2021 for residential properties with a dutiable value of up to $1 million, with the specific waiver being:

• 50% for new residential properties; and
• 25% for existing residential properties.

Details of eligibility and other conditions of the stamp duty waiver for residential properties will be announced by the Treasurer.

The changes are contained in the State Taxation Acts Amendment Bill 2020 (Vic) and are currently before the Legislative Council.

By Jinny Chaimungkalanont, Partner; Sorin Ridgway-Browne, Solicitor.

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