The Australian State and Territory Budgets for the 2015-16 financial year handed us a mixed bag of approaches to stamp duty. South Australia made some significant changes and reductions to the stamp duty base, but much of these were simply those changes that were originally agreed to under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (the IGA) signed in 1999. Other jurisdictions, like Tasmania and Queensland, announced very little reductions, noting that Tasmania had already implemented the IGA changes some time ago, and Victoria actually introduced a new duty and land tax surcharge for “foreigners”.
Whilst State and Territory Budgets usually set the policy agenda for ‘state taxes’, it is still yet to be determined what effect, if any, the Federal White Papers on Tax and the Reform of the Federation will have on state taxes more broadly. There may still be changes yet to come.
A number of key stamp duty changes were announced in the 2015-2016 Budget. Broadly, a phased removal of stamp duties on all assets other than residential property will take place over the next 3 years. This includes an immediate abolition of share transfer duty and duty on the transfer of non-real property (if not transferred with land assets).
From 1 July 2016, there will be a reduction in stamp duty on non-residential, non-primary production real property transfers, until a foreshadowed complete removal of duty on these items on 1 July 2018.
There has also been an expansion of the availability of corporation reconstruction relief:
- No requirements to transfer ‘substantially all assets’;
- Change to ‘corporate group’ definition; and
- Removal of three year pre and post association tests.
Various land tax amendments will also take effect from 30 June 2015.
New South Wales
No major changes to stamp duty for 2015-2016. However, the Government affirmed its commitment to abolish stamp duty on certain dutiable property in accordance with delayed promises under the IGA.
From 1 July 2016, duty will not be imposed on the transfer of:
- Unquoted marketable securities;
- Non-real property business assets; and ictori
- Business mortgages.
The Victorian Budget announced the introduction of various new taxation measures:
- A 3 per cent stamp duty surcharge will be applied to foreign buyers or acquirers of residential real estate from 1 July 2015, in addition to normal land transfer duty amounts;
- A 0.5 per cent land tax surcharge will be applied to absentee owners of property in Victoria, in addition to any other land tax payable, from the 2016 land tax year; and
- An exemption from motor vehicle stamp duty for all vehicles classified as mobile plant (under 4.5 tonnes) and plant-based special purpose vehicles (over 4.5 tonnes).
Australian Capital Territory
From 1 July 2015, duty on insurance policies will be reduced as follows:
- General insurance: Reduced from 4 per cent to 2 per cent; and
- Life Insurance: Reduced from 2per cent to 1 per cent.
This is in accordance with the Government’s phased removal of duty on insurance over 5 years (commenced from 1 October 2012). Duty on insurance is scheduled to be fully abolished from 1 July 2016.
Continuing with the scheduled phasing out of conveyance duty over 20 years, the Treasurer has announced a reduction in rates and announced a further reduction for properties (both residential and commercial) valued over $1.455 million. Top duty rate is now 5.17 per cent (formerly 5.25 per cent) with a historical high of 6.75 per cent. The decreasing rate of stamp duty coincides with an increasing rate of land tax - reflecting the Government’s switch to a broad based land tax.
The Government announced the introduction of a transfer duty exemption for certain property transfers by incorporated associations.
From 2015-2016, a flat land tax amount of $300 will be introduced for taxable land with an unimproved value between $300,000 and $420,000.
Land tax rates will also increase, except the top rate which remains at 2.67 per cent for unimproved land over $11 million. The rate increases are in conjunction with adjustments to the relevant thresholds of unimproved value of land. In some circumstances this may significantly increase a land tax liability, for example, at the $5.5 million threshold the liability has increased by $8,990 per annum.
The Northern Territory Budget announced the abolition of stamp duty on life insurance policies from 1 July 2015.
Senior, Pensioner and Carer Concession on stamp duty will also be retrospectively increased from 28 April 2015 to $10,000 (up from $8,500).
Queensland and Tasmania
No major changes to stamp duty.
The impetus and appetite for stamp duty change is the highest now since the IGA in 1999. However, the continued divergence in approaches shown in the recent Budgets means that there is still considerable inconsistency between the States and Territories.