Victoria to launch Stamp Duty Reform To Boost Business, Industry and Jobs

Victorian Treasurer Tim Pallas delivers his budget speech in the Legislative Assembly at Victorian State Parliament in Melbourne, Australia on May 20, 2021. (AAP Image/James Ross)

A key reform announced in today’s Victorian Budget 2023/24 is to replace the old stamp duty system for commercial and industrial properties with an annual property tax to boost business growth and create jobs.

According to the Economic Growth Package announced today by the treasurer, the existing lump-sum stamp duty structure for commercial and industrial properties will gradually move over to a more efficient yearly property tax system starting from July 1, 2024.

“Business and industry have told us they want this reform, and we’ve listened. These landmark changes will enable businesses to be more dynamic and agile and to grow and employ more workers,” said Treasurer Tim Pallas.

“We’re removing barriers to larger investments, accelerating business growth and helping our economy grow even stronger.”

The new switch is forecasted to bring $50 billion in Net Present Value terms (NPV) to the Victorian economy over time. NPV is the difference between the present value of cash inflows and the present value of cash outflows over a certain timeframe.

So, starting from July 1, 2024, an owner of a commercial or industrial property will be able to start paying the previously called lump-sum stamp duty over a 10-year period rather than in one go.

While the annual payment system can free up much-needed capital and help businesses with their operations and give employers incentives to hire more workers, these new measures do not apply to any existing owners of any current commercial or industrial properties purchased before July 1, 2024.

At the same time, once a property is registered with the new system after this time, stamp duty will never again be payable on a transaction, and the annual property tax will take effect.

The new annual property tax will be set at a flat one percent of the property’s unimproved land value.

Without the large sum of upfront costs, retail business owners will have more freedom to move to bigger facilities or expand existing capacity.

Move Welcomed By Commerce and Industry

Victorian Chamber of Commerce and Industry CEO Paul Guerra hailed the new policy and said that the Victorian Chamber has been working with the State Government on this landmark and generational productivity reform and supports it.

“This is exactly the type of progressive tax reform that is required to free up stamp duty charges which will accelerate building upgrades, stimulate investment in commercial property and free up more capital.”

The final form of the transition will be detailed later this year after ample consultation with business and industry.

This reform does not apply to residential properties.

860,000 Victorians With Second Property Hit With Higher Land Tax

Victorians with a second property will get a tax hike of $975 for properties over $300,000, plus 0.1 percent of the value of their landholding above the threshold.

The new land tax change will start on January 1, 2024, and the Andrews government believes that 860,000 taxpayers will be affected.

This new change will raise more than $4 billion for the state government.

The Victorian opposition Leader John Pesutto expressed in a statement that life would be harder for Victorians because of the measures stated in Labor’s ninth budget.

He pointed out that Victoria’s debt is projected to climb to $171.4 billion by 2026-27.

Pesutto said “It fails to offer any relief for Victorians when they need it the most and will put Victoria further behind the rest of Australia as a place to work, invest and raise a family,” reported by the Age.