As the new financial year rapidly approaches, our experts outline key changes that take effect from 1 July 2017 – and what you can do to best prepare for them.
In this wrap-up, we examine the changes set to take place in the areas of Competition & Consumer, Property & Real Estate, Superannuation, and Workplace Relations & Safety.
Competition & Consumer
Dubbed the ‘Netflix Tax’, from 1 July 2017 GST will be imposed on all inbound intangible supplies made by overseas suppliers to Australian consumers.
This will impact items including video games, media, software, e-books and other digital content, including streaming services such as Netflix. It also applies to imported services including consultancy and professional services performed offshore for Australian customers.
This will arguably act as an equaliser given local Australian companies must collect GST, whilst global companies, at least until 1 July 2017, previously did not have to collect GST on services and digital products exported into Australia.
Treasurer Scott Morrison told Parliament when first introducing the Bill that the tax “…ensures Australian business selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia”.
The Netflix Tax will raise key legal issues as overseas businesses must confront whether the supplier or operator of the distribution service is responsible for collecting the tax.
Commercial decisions will also need to be made concerning whether suppliers will pass on the increased costs to the user, or whether they will absorb the tax themselves to preserve their market share. Reportedly, Netflix itself has not yet confirmed if its prices will increase by the cost of the tax, or whether it will absorb some of the cost.
Property & Real Estate
CHANGES TO THE NSW OFFICE OF STATE REVENUE
Increase to the Foreign Person Surcharge
The Foreign Person stamp duty surcharge will be increased from 4 per cent to 8 per cent for all contracts exchanged after 30 June 2017.
For more information on the Foreign Person Surcharge please see here.
New First Home Owner Grants and Exemptions
From 1 July 2017, first home buyers will:
- be exempt from stamp duty for all properties (new and old) worth up to $650,000
- receive a stamp duty discount for all properties (new and old) worth up to $800,000
- be subject to a stricter Frist Home Owner Grant regime.
Abolishment of the 9 per cent stamp duty on lenders mortgage insurance
The 9 per cent insurance duty on lenders mortgage insurance will be abolished from 1 July 2017.
CHANGES TO AUSTRALIA’S FOREIGN RESIDENT CAPITAL GAINS TAX (CGT) REGIME
From 1 July 2017:
- the CGT withholding rate for foreign tax residents will be increased from 10.0 per cent to 12.5 per cent
- the CGT withholding threshold for foreign tax residents will be reduced from $2 million to $750,000.
Changes to Retail Leases Act
Changes to the Retail Leases Act 1994 (NSW) have been passed. The Retail Leases Amendment (Review) Act 2017 No 2 will commence on 1 July 2017.
Four key changes are:
- Disclosure Statements and Undisclosed Outgoings – tenants will not be liable for outgoings not disclosed in the Lessor Disclosure Statement. In addition, if the actual amount of any disclosed outgoing is more than was estimated in the Lessor Disclosure Statement, unless there was a reasonable basis for the inaccurate disclosure, only the amount as disclosed will be recoverable
- Disclosure statements and termination – if a tenant terminates a lease during the first six months as a result of not receiving, or as a result of receiving a misleading disclosure statement, the tenant may recover its costs of entering into the lease including fitout costs
- Minimum term – the minimum five year term has now been abolished
- Tribunal jurisdiction – NCAT’s monetary jurisdiction is increased from $400,000 to $750,000.
Other changes have been made in relation to defining a retail tenancy, execution and registration requirements and the return of bank guarantees. See our article here for further details.
Delays to building bonds and defect inspection report regime
One of the key changes in the residential strata space (the building bonds and defect inspection report regime, which will require developers to lodge a bond of 2 per cent of the construction cost, which can be accessed by owners corporations to fund rectification of defects) which was to take effect on 1 July 2017 has now been deferred to 1 January 2018.
This means that building contracts for residential strata that are entered into on or before 31 December 2017 will not be subject to the scheme.
Read more here about the scheme and its deferral.
Superannuation, Financial Services & Funds Management
There will be some key changes to the superannuation landscape come 1 July 2017 with the Federal Government set to implement a suite of reforms.
Please click here to see the Treasury’s comprehensive outline of the changes.
Workplace Relations & Safety
Sparking plenty of discussion, the key workplace change is the Fair Work Commission’s decision to increase the federal minimum wage by 3.3 per cent which will come into effect from 1 July 2017.
The increase is substantially more than last year’s increase of 2.4 per cent but still falls short of the increases being sought by the unions.
The decision is said to affect over 2.3 million employees in Australia and has the intention of improving the relative living standards of the low paid.
Employers should ensure that they are ready to implement these increases by reviewing their current remuneration arrangements and checking that they will comply with the proposed increases. They should also review any applicable awards as part of this review.
For more information on the changes, please see our full article here.