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GEN-01-18

Changes to state taxes June 2018

The State Taxation Acts Amendment Act 2018 received Royal Assent on 13 June 2018 and introduces changes to various Acts. It includes revenue initiatives announced as part of the 2018-19 Victorian Budget.

The Duties Act 2000, Payroll Tax Act 2007 and Unclaimed Money Act 2008 have all been amended.

Budget announcements

Payroll Tax Act 2007

A reduced payroll tax rate from 3.65 per cent to 2.425 per cent is available to qualifying regional businesses from 1 July 2018. A regional business is a business with an ABN registered in regional Victoria which pays at least 85 per cent of its payroll to regional employees. Regional Victoria has the same meaning as it does for the purposes of the first home owner grant.

Duties Act 2000

  • Australian Defence Force personnel are exempt from the first home buyer duty exemption/concession residency requirement for transfers occurring on or after 1 July 2018. This exemption applies to current members of the Australian Army, Air Force or Navy who are enrolled to vote in Victoria. The exemption does not apply to reservists of the Australian Army, Air Force or Navy or to Australian public service staff.
  • The young farmer duty exemption threshold is aligned with the exemption threshold for the first home buyer duty exemption. The exemption will be available for farmland purchases valued up to $600,000, with a concession from duty applying for farmland purchases valued from $600,001 and $750,000. The new thresholds will apply to transfers occurring on or after 1 July 2018.

Other amendments

Duties Act 2000

The Duties Act 2000 has been amended to:

  • Introduce an exemption from foreign purchaser additional duty for foreign purchasers who jointly purchase a principal place of residence with their spouse/domestic partner who is an Australian citizen, permanent resident or New Zealand citizen who holds a special category visa.
  • Extend the duty exemption for equity release products so that it can apply beyond arrangements involving financial institutions and namely to arrangements involving any body regulated by the Australian Prudential Regulation Authority.
  • Respond to the recent Court of Appeal case of Commissioner of State Revenue v Danvest Pty Ltd & Anor. The changes ensure that the acquisition of a partnership interest where the partnership holds land is considered to be a dutiable transaction in all cases, with the duty reflecting the commercial reality of the arrangement and to ensure the corporate reconstruction exemption can apply where a partnership is part of the relevant corporate group.
  • Allow the spouse/domestic partner duty exemption to apply when the transfer involves an existing mortgage for the subject property being assumed or replaced by the transferee.
  • Ensure the apparent purchaser duty exemption only applies where the real purchaser has paid, or will pay, all of the purchase money and to enable a concession to apply where the real purchaser subsequently acquires a greater interest in the property than their interest in the purchase money resulting trust. 
  • Allow the interests of all foreign persons (whether associated or not) to be taken into account when determining whether a corporation is a foreign corporation or a trust is a foreign trust for the purposes of the foreign purchaser additional duty provisions.
  • Ensure that the duty concession that applies to the conversion of private landholders to public landholders will not apply to the calculation of the foreign purchaser additional duty payable, if any, on the conversion. The concession, being 10 per cent of the duty otherwise payable, will continue to apply to the normal duty payable on the relevant acquisition, but not to the calculation of the foreign purchaser additional duty.

Unclaimed Money Act 2008

Executors or administrators of deceased estates can now make a valid claim where a grant of probate or a letter of administration has been granted, sealed or re-sealed by a Supreme Court of any Australian state or territory.