There are three main areas of significant change:
Once a property enters the new system the annual property tax will be payable at a flat 1% of the property’s unimproved land value.stamp duty will never again be payable on a transaction relating to that property.
The Victorian Government has announced a 'COVID Debt Repayment Plan' which is projected to assist in paying down $31.5 billion of COVID debt over the next 10 years.(Overall Victorian debt is around $161 billion). This plan includes the following tax increases which are expected to apply for a period of 10 years:
From 1 July 2023
An increase in the payroll tax rate by 0.5% for businesses with national payrolls over $10 million, plus an additional 0.5% for businesses with national payrolls over $100 million.
An increase to land tax rates by 0.1% for owners holding land with a taxable value over $300,000 (if the land is not held in a trust) or $250,000 (generally if the land is held in a trust). There are also proposed additional fixed charges (of $500 for landholdings with a taxable value between $50,000 and $100,000 and $975 for landholdings with a taxable value above $100,000) and a decrease in the tax-free threshold for general (non-trust) land tax rates (from $300,000 to $50,000) which will result in significantly higher land tax assessments for investors with relatively low value landholdings (e.g. individuals and SMSFs). This also means some investors who previously paid no land tax will begin paying land tax for the first time.
With effect from the 2024 land tax year (i.e. having regard to properties owned as at midnight on 31 December 2023), the Government proposes to increase the absentee owner surcharge land tax rate (AOS) from 2% to 4%.
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