Changes to Victorian State Taxes – State Budget 2017/18

05 May 2017

The Victorian Treasurer has announced a number of significant changes to stamp duty, land tax, payroll tax and the First Home Owner Grant (FHOG) in the State Budget for 2017/18. A summary of the key changes most relevant to our property clients are outlined below.

Stamp Duty – Changes effective on or after 1 July 2017

The following new stamp duty concessions have been announced:

  • Stamp duty to be abolished for first-home buyers purchasing a property up to $600,000, and a duty concession for first-home purchases valued between $601,000 and $750,000.
  • Insurance duty will no longer apply to insurance policies for crops, livestock and agricultural machinery.

The following changes have been made to existing stamp duty concessions or exemptions:

  • The “off-the-plan” stamp duty concession will only apply to buyers eligible for the principal place of residence or first home buyer duty exemption/concession. The concession will no longer apply to “off the plan” buyers of investment properties or commercial properties.
  • Property transfers between spouses and de facto partners involving commercial and/or investment properties will no longer be exempt from stamp duty. The exemption will still apply to a principal place of residence transfer and to transfers following a relationship breakdown.
  • New passenger vehicles to be subject to the same motor vehicle duty rates as used passenger vehicles. New passenger vehicles were previously subject to lower motor vehicle duty rates.
Land Tax – Changes effective 1 January 2018
  • A new vacant residential property tax (VRPT) will take effect from 1 January 2018. This could be relevant for your display homes.
  • This will be a tax on residential property generally within the Greater Melbourne Area which is unoccupied for more than a total of 6 months (whether on a continual or a non continual basis) in a calendar year.
  • That tax will be 1% of the Capital Improved Value of the Property.
  • Various exemptions will apply (e.g. for holiday homes).
  • The VRPT will be in addition to normal land tax.
  • Land Tax valuations will be undertaken annually rather than every two years (effective 1 January 2019).
Payroll Tax – Changes effective from 1 July 2017
  • Payroll tax threshold to be raised by $25,000 to reach $625,000 for 2017-18, and increase to $650,000 in 2018-19.
  • Payroll tax rate paid by regional Victorian businesses to be reduced by 25 per cent, down to 3.65 per cent, where at least 85 per cent of their payroll goes to regional employees.
First Home Owner Grant (FHOG) – Changes effective to contracts signed on or after 1 July 2017
  • $20,000 FHOG to be available for homes built in regional Victoria up to $750,000 (up until 30 June 2020).
  • Australian Defence Force (ADF) personnel to receive a special exemption from the FHOG residence requirement (from the date of assent of the Bill).

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