The WA State Budget was presented on 10 May 2018 and confirmed certain tax changes for foreign investors and large employers as outlined below.
The McGowan Government will introduce a Foreign Buyers Duty Surcharge from 1 January 2019 in relation to residential property transactions. However, rather than the 4 percent surcharge that was originally stated, the surcharge rate will instead be7% in addition to general rates of duty. This mirrors South Australia’s approach of originally announcing a surcharge of 4 percent but increasing the initial rate to 7 percent after Victoria, New South Wales and Queensland all announced an increase to their existing surcharges to 7 or 8 percent. Significant residential developments are expected to be exempt but it is unclear at this point what the conditions will be for an exemption from the surcharge.
From 1 July 2018, Western Australia will also have a new temporary progressive payroll tax scale for large employers for a finite period of 5 years, which is expected to increase the amount of payroll tax revenue by 4.2 percent after three consecutive years of declining collections. Western Australian employers with Australia-wide taxable wages above $100 million will pay an increased marginal rate of 6 percent and employers with payrolls that exceed $1.5 billion will pay an increased marginal rate of 6.5 percent. Western Australian employers with Australia-wide payrolls of $100 million or less will continue to pay payroll tax at 5.5 percent, which is currently the equal-highest rate in Australia.
The Budget Papers can be viewed here.
Similar to other jurisdictions with a duty surcharge (Vic, NSW, Qld and SA), if you are contemplating a transaction involving WA property, we recommend you seek advice regarding whether the vehicle contemplated for the transaction could be a foreign trust or company triggering the surcharge. Please contact Marina Raulings if you require further advice.