By Andrew Faulkner
Ladies and gentlemen, fasten your seatbelts as we delve into the tempest of fiscal change that the 2023 Victorian state budget has unleashed upon us.
The 2023 Victorian state budget has introduced significant changes to taxes, including land tax, payroll tax, and stamp duty.
The government aims to address the state’s accumulated debt of $31.5 billion from 2019-20 to 2022-23 through a “COVID debt levy”. The budget includes new measures to raise revenue, aiming to collect $8.6 billion over the next four years, with $4.74 billion expected to be raised in the 2024 fiscal year alone.
These changes will affect various aspects of taxation and will impact many Victorians and businesses. It’s crucial for business owners to seek advice on managing these changes and minimizing tax-related risks, especially when considering real estate investments, developments, and divestments.
One major change revolves around land tax. The tax-free threshold for general land tax rates will be reduced from $300,000 to $50,000 starting from 1 January 2024. This will impact many previous exempt apartments in the CBD.
Additionally, a “COVID-19 debt temporary surcharge” will be added to existing land taxes. This surcharge will include a flat fee of $500 for taxable landholdings between $50,000 and $100,000, and a fixed fee of $975 for holdings between $100,000 and $300,000. For landholdings exceeding $300,000, a fixed surcharge of $975 and an increased land tax rate of 0.10% of the land’s value will apply. Trusts with a value above $250,000 will also face a $975 fee and an increased land tax rate.
These changes are projected to generate $4.74 billion over four years. Smaller landholders will be particularly affected by the lowered threshold.
From 1 January 2024, the State Revenue Commissioner can extend land tax exemptions by two years for principal residences undergoing construction or renovation.
A breakdown of tax brackets is provided, detailing the tax rates for various income levels. These rates range from no tax for unimproved property values up to $50,000, to a maximum tax of $31,650 plus 2.65% of the amount over $3,000,000.
Navigating the Tax Torrent: As the storm gathers momentum, business owners find themselves in the crosshairs of fiscal change. Seeking counsel is no longer an option but a necessity, for strategic advice becomes the ship’s compass in these treacherous waters. The implications for investments, developments, and divestments cannot be underestimated. In this labyrinth of fiscal complexity, the 2023 Victorian state budget leaves none untouched. It’s a tale of thresholds lowered, surcharges intensified and exemptions shielded. Amidst the fiscal turbulence, we stand, bracing for the impact and navigating the land tax changes to the Victorian landscape.
Business owners are advised to seek expert advice to navigate these changes, as they have far-reaching implications for investments and developments.
| Land tax general rates (from 2024 land tax year) | |
| Total taxable value of land holdings | Land tax payable |
| < $50,000 | Nil |
| $50,000 to < $100,000 | $500 |
| $100,000 to < $300,000 | $975 |
| $300,000 to < $600,000 | $1350 plus 0.3% of amount > $300,000 |
| $600,000 to < $1,000,000 | $2250 plus 0.6% of amount > $600,000 |
| $1,000,000 to < $1,800,000 | $4650 plus 0.9% of amount > $1,000,000 |
| $1,800,000 to < $3,000,000 | $11,850 plus 1.65% of amount > $1,800,000 |
| $3,000,000 and over | $31,650 plus 2.65% of amount > $3,000,000 |
Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.
