2017-18 SA Budget
On 22 June 2017, the 2017-2018 South Australian (SA) Budget was handed down.
One of the key changes announced was a major bank levy for major banks offering services in SA, which will be introduced from 1 July 2017:
· This levy will apply to authorised-deposit-taking institutions that offer services in SA and are liable for the Commonwealth major bank levy.
· The SA bank levy will apply at a rate of 0.015 per cent of an ‘SA share’ of the total value of the bank liabilities subject to the Commonwealth Government levy. The SA share of the bank liabilities will be determined based on SA's gross state product (GSP) as a percentage of Australia's gross domestic product (GDP) for the financial year that is 2 years before the year of the particular levy (due to availability of relevant data). For the 2017-18 Financial Year, this will be 6.06 per cent (i.e. total bank liabilities subject to the Commonwealth levy x 6.06 per cent x 0.015 per cent).
· Payments of the levy will generally be required to be made quarterly on 21 March, June, September and December each year (for the previous quarter ended 31 December, 31 March, 30 June and 30 September respectively). However, the first payments for the quarters ended 30 September and 31 December 2017 will not be required to be made until 21 March 2018.
Like many other States, SA also introduced a number of measures focused on housing affordability:
· The key announcement was that SA is joining Victoria, New South Wales (NSW) and Queensland (QLD) in introducing a foreign purchaser surcharge, announcing that a stamp duty surcharge of 4 per cent will apply to foreign purchasers of SA residential property from 1 January 2018.
· In addition, like many other States, the off-the-plan stamp duty concession was amended. In SA, this concession will be extended until 30 June 2018 but will be re-targeted so that it no longer applies to foreign purchasers.
· An AUD10,000 grant will be provided to eligible off-the-plan apartment purchasers where the contract is entered into between 22 June 2017 and 30 September 2017.
· A five year land tax exemption will apply to eligible apartments bought off-the-plan where the contract is entered into between 22 June 2017 and 30 June 2018.
Other measures included:
· Job Accelerator Grant payments increased by up to AUD5,000 for businesses that hire apprentices or trainees (backdated to 1 July 2016)
· Payroll tax rate for small businesses lowered to 2.5 per cent from 1 July 2017.
Importantly, SA did not announce any changes to its previously announced (and legislated) plan to continue the reduction of the general stamp duty rate. Accordingly, from 1 July 2017, the SA stamp duty rate for non-residential and non-primary production land will drop by a further third, to around 1.84 per cent.
The Budget Measures Bill 2017 (SA) proposed to implement the above changes was introduced to Parliament on 22 June 2017.
2017-18 NSW Budget
On 20 June 2017, the 2017-18 NSW Budget was handed down. New tax measures announced include:
· As previously announced, from 1 July 2017, the foreign investor transfer duty surcharge will increase from 4 per cent to 8 per cent, and the current land tax surcharge of 0.75 per cent will increase to 2 per cent per annum from the 2018 land tax year.
· Australian-based foreign-owned developers will be granted a refund of surcharges paid, provided they sell newly developed homes within 5 years to persons not associated to the corporation, and satisfy certain other requirements.
· Commercial residential property will be exempt from the foreign purchaser surcharge, with retrospective effect from 21 June 2016. Guidelines will be issued to identify relevant classes of commercial residential property that will be exempt. The Budget papers give the example of purpose built student accommodation.
· From 1 July 2017, first home buyers will be exempt from transfer duty for both new and existing properties valued up to AUD650,000 and concessions on duty will apply for properties valued between AUD650,000 and AUD800,000.
· The current concession for residential off-the plan purchases (which allows for the payment of duty to be delayed for up to 12 months) will be targeted to owner occupiers only.
In addition, there were a number of insurance duty changes, including:
· From 1 January 2018, small businesses with aggregate turnover of less than AUD2 million will be exempt from insurance on their premiums relating to commercial vehicle insurance, professional indemnity insurance, and product and public liability insurance.
· From 1 July 2017, insurance duty on lenders mortgage insurance will be abolished.
· From 1 January 2018, insurance duty on crop and livestock insurance will be abolished.
The State Revenue Amendment (Budget Measures) Bill 2017 has been introduced into the NSW Parliament. The Bill proposes various amendments to the Duties Act 1997 (NSW), the Land Tax Act 1956 (NSW) and the Land Tax Management Act 1956 (NSW) to implement the measures discussed above.
2017-18 QLD Budget
On 13 June 2017, the 2017-18 QLD Budget was handed down by the QLD Treasurer. The Budget contains the following key measures:
· from 1 July 2017, a 1.5 per cent surcharge for absentee payers of land tax,
· a temporary increase in the First Home Owners' Grant from AUD15,000 to AUD20,000 for a further six months,
· continuing the payroll tax rebate on the wages of apprentices and trainees at the increased rate of 50 per cent until 30 June 2018, and
· additional funding for the Office of State Revenue Transformation Program.
In addition, the Revenue Legislation Amendment Bill 2017 completed its passage through Parliament on 16 June 2017 without amendment. The Bill amends the First Home Owner Grant Act 2000 (QLD) and the Land Tax Act 2010 (QLD) to implement the above measures.
2017-18 Tasmanian Budget
On 25 May 2017, the 2017-18 Tasmanian Budget was handed down by the Tasmanian Treasurer. The Budget contained no new taxes or increases to taxes. Tax-related measures include:
· extension of the AUD20,000 first-home builders grant to June 2018,
· previously announced introduction of a payroll tax rebate scheme for a business that employ apprentices, trainees or youth employees, and
· changes to the Duties Act 2001 (TAS) in relation to house and land packages.
Additional details are available on the Tasmanian State Revenue Office’s website.
2017-18 ACT Budget
On 6 June 2017, the Australian Capital Territory (ACT) Chief Minister and Treasurer handed down the 2017-18 ACT Budget. It includes the following revenue measures:
· from 1 July 2018, land tax will be extended to all residential dwellings that are not the owner’s principal place of residence, whether they are rented or not,
· commencing in 2017-18, residential and commercial conveyance duty rates will be separated to allow levels of taxation to be adjusted, to better reflect the differences in each sector, as the process of phasing out conveyance duty continues,
· conveyance duty for commercial transactions below AUD1.5 million will be halved in 2017-18, before being fully phased out by 2018-19, and
· increases in the building levy, the fire and emergency services levy and car registration fees.
QLD tax rulings on transfer duty
The QLD Commissioner of State Revenue has issued the following public rulings:
· DA228.1.1—Corporate trustee duty deduction—transfer duty for trust acquisition, which clarifies the meaning of ‘the acquisition’ as it appears in section 228(1)(b) of the Duties Act 2001 (QLD) and outlines the circumstances in which the section applies.
· DA115.1.1 — Transfer duty — cancelled agreements, which clarifies the Commissioner’s application of the exemption for cancelled agreements under section 115 of the Duties Act 2001 (QLD).
Information required when transferring real property in QLD
From 1 July 2017, additional information will be required when transferring real property in QLD as a result of new federal legislation requiring all states and territories to report information to the Australian Taxation Office.
WA tax ruling on when items will be excluded from the definition of chattel
The Western Australian (WA) Office of State Revenue has released Revenue Ruling DA 21.0, which sets out the Commissioner’s interpretation of when items will be excluded from the definition of chattel in section 3 of the Duties Act 2008 (WA).
QLD tax ruling on extended concession for dutiable transactions for family primary production businesses
The QLD Commissioner of State Revenue has issued Public Ruling DA105.4.1: Extension of Concession for Dutiable Transactions for Family Businesses of Primary Production - Defined Relative. On 23 May 2017, an administrative arrangement was approved to enable the administration of the Duties Act 2001 (QLD), for a 12-month period, on the basis that the definition of ‘defined relative’ in Schedule 6 of the Act includes a person’s first cousin and the first cousin’s spouse. All other conditions of the concession will continue to apply. This public ruling sets out the terms of the administrative arrangement.
All-in-one online duties form for land transfers in Victoria
The State Revenue Office (SRO) of Victoria has released an all-in-one online duties form for land transfers. From 1 July 2017, taxpayers and their representatives are required to use the online form for all contracts or agreements giving rise to land transfer duty entered into on or after that date. Additionally, from 1 July 2017, the SRO will collect immigration data for vendors and purchasers involved in land transfers in Victoria on behalf of the Commonwealth Government.
Revenue SA proposes changes relating to transfers of real property in SA
Revenue SA has announced proposed changes to third party reporting requirements, processes and systems relating to transfers of real property in SA over the coming year. These changes are necessary to help the State meet its reporting obligations for the Commonwealth Government’s initiatives on third party reporting and the national register of foreign ownership of land titles. Comments on the proposed legislation changes can be made until 9 June 2017.
State legislative amendments
The Revenue Legislation Amendment Act 2017 (No 2) (ACT) received notification on 16 May 2017, and comes into effect on 1 July 2017. The Act amends the Duties Act 1999, Land Tax Act 2004 and Rates Act 2004, to give effect to decisions arising from the 2015-16 and 2016-17 ACT Budget. These decisions include changes to the method for calculating rates and land tax for residential unit subdivisions, and the repeal of insurance duty legislation.
The State Taxation Acts Amendment Bill 2017 has been introduced into the Victorian State Parliament. The Bill gives effect to the various measures in the Victorian State Budget, which was delivered on 2 May 2017.
The Taxation and Grants Legislation (Housing Construction Amendments) Bill 2017 has been introduced into the Tasmanian Parliament. The Bill proposes to amend:
· The Duties Act 2001 (TAS): so that the consideration for a dutiable transfer of land will exclude building works or other improvements agreed to be made to the land, which are performed after the land transfer as part of an arrangement between associated persons. Furthermore, for single-dwelling house and land packages, the consideration for the land transfer will also exclude improvements that are performed on the property after the agreement for sale is entered into. Full duty will continue to apply to the purchase of spec homes, where the improvements have already been completed at the time of agreement and land transfer.
· The First Home Owner Grant Act 2000 (TAS): to extend the AUD20,000 grant for eligible first home buyers who enter an eligible transaction for the purchase of a newly constructed home, those who have new homes constructed, and owner-builders. The grant will be available for eligible transactions entered into from 1 July 2017 to 30 June 2018 inclusive.
State cases update
· The NSW Civil and Administrative Tribunal in Alexander v Chief Commissioner of State Revenue has affirmed the duty assessments issued by the Chief Commissioner in relation to the transfer of property under a deceased estate. The duty was assessed in accordance with section 63(2) of the Duties Act 1997 (NSW), which reduces the dutiable value of the property where the beneficiary had an entitlement to the property under the will. The Tribunal held that the application of section 63(2) is not restricted to commercial transactions, and that the Chief Commissioner's calculation of the reduction under section 63(2) was correct.
· The NSW Civil and Administrative Tribunal in D W Tolson Management Pty Ltd v Chief Commissioner of State Revenue has affirmed the land tax assessments issued by the Chief Commissioner of State Revenue. The Tribunal found that the relevant land was not exempt from land tax as land used for primary production because the maintenance of cattle on the land for the purposes of disposing of mushroom waste from another property did not satisfy the conditions for the exemption, nor did activity involved in gaining approvals necessary for a new mushroom growing facility on the land.
· The NSW Civil and Administrative Tribunal in Bisvic Pty Limited v Chief Commissioner of State Revenue has affirmed the Chief Commissioner of State Revenue’s earlier decision. The Tribunal upheld that land was not eligible for an unutilised value allowance in respect of relevant years in which the applicant was found not to be conducting the business of grazing. For the other years, the Tribunal set aside the Chief Commissioner of State Revenue’s decision and held that the land was used for a grazing business.
· The NSW Civil and Administrative Tribunal in Esplanade Wollongong Unit Trust v Chief Commissioner of State Revenue has set aside the Chief Commissioner of State Revenue’s decision regarding the application of stamp duty to a series of transactions involving land originally held by two parties as tenants in common and a subsequent transfer of a half interest to one party, settlement of a trust and a subsequent change in trustee. The Tribunal agreed with the Chief Commissioner of State Revenue on most aspects (except for the valuation of the property), including that, in respect of the second disputed transfer (which involved the transfer of the property to a new trustee), ad valorem duty was payable because a half interest in the property was held by the transferor in its own right and not as trustee. The Tribunal also held that the premium rate of duty applied because the property was used for residential purposes and was not used at the relevant time as trading stock.
- The Victorian Civil and Administrative Tribunal in Fagridas v Commissioner of State Revenue has affirmed the duty assessments issued by the Commissioner of State Revenue, finding that the transfer of land was not exempt from duty under section 36A of the Duties Act 2000 (VIC). The Tribunal affirms that the land was transferred to the applicants as purchasers pursuant to a contract of sale and not as beneficiaries of the Trust.