As you may be aware, the Victorian Treasurer handed down the 2017-18 Budget last week. As part of that Budget certain announcements were made that may impact you and your clients. Below we summarise those relevant changes and how they may impact. Feel free to call us if you require any further information.
|New Measure||Expected Start Date||How this Announcement may impact you or your clients|
|Property transfers between spouses and de facto partners involving commercial and/or investment properties (that is, assets that do not constitute a principal place of residence) to no longer be exempt from transfer stamp duty.||From 1 July 2017||Consideration should be given to undertaking any restructures involving the transfer of assets between spouses that do not constitute a principle place of residence prior to 1 July 2017. If not, such restructures will involve stamp duty costs at 5.5% (plus the surcharge of 7% if applicable). Given the proposed revaluation of land for land tax purposes on a yearly basis, and potential higher land tax brackets and costs, consideration may need to be given to land tax planning. In light of the above announcement, such planning should be considered prior to 1 July 2017.|
|Vacant residential property tax of 1% of the property’s capital improved value to be applied to properties in certain local council areas of Melbourne that are left unoccupied for six months or more in a calendar year.||From 2017 calendar year.||For any taxpayers that may have vacant properties, whether foreign or local investors, they should be informed of this proposed new tax and consideration should be given to any planning opportunities to meet the required greater than 6 month occupation test. Generally, this will require planning well in advance of 1 July 2017.|
|Land tax valuations by the Valuer-General to be undertaken annually instead of every two years.||1 January 2019||2016 was a revaluation year, which means the site value of properties of taxpayers most likely increased for their 2017 land tax assessment, thereby increasing the total taxable value of their landholdings and their land tax assessment. As valuations increase, the property falls into higher tax brackets with higher rates of land tax and land tax costs. This problem will be exacerbated by yearly valuations rather than valuations every two years, as previously occurred. Consideration should be given to tax planning for landholdings.|
|The current payroll-tax free threshold of $575,000 for 2016-17 will be increased to $650,000 by 1 July 2018. Additionally, from 1 July 2017, a lower payroll tax rate of 3.65% will apply to businesses with payrolls that comprise at least 85% regional employees. The threshold under which businesses can opt to make annual payroll tax payments, rather than monthly payments, will increase from annual payroll tax liabilities of $10,000 to $40,000.||By 1 July 2018||Consideration should be given to whether there is potential for de-grouping of employers and access to the higher payroll-tax free threshold. Generally, this should be available where employers are genuinely independent businesses, even where there is common ownership. Consideration should be given to accessing the annual payments concession, to improve cash flow for small businesses.|
|From 1 July 2017, the rate of duty for new passenger vehicle purchases will increase from $6.40 per $200 or part thereof (3.2%) to $8.40 per $200 or part thereof (4.2%), on the dutiable value of vehicles that do not exceed the luxury car threshold.||1 July 2017||Consideration should be given to bringing forward new car purchases to 30 June 2017 for these types of vehicles.|