A reprieve from new taxes, with existing taxes increased 5 min read
No major tax reforms and no new taxes were announced in the 2024–25 Budgets that have now been delivered in all Australian jurisdictions. However, the two common themes to emerge have been incremental increases to existing taxes, particularly on foreign investors and large businesses; as well as 'cost of living' tax relief—specifically, payroll tax exemptions for bulk-billing general practitioners and housing affordability measures.
One major reform, announced in last year's Victorian Budget, and having taken effect on 1 July 2024, is the new Victorian Commercial and Industrial Property Tax.
In this Insight, we examine the Budget announcements that will be relevant to business and industry.
Key takeaways
- Duty and land tax surcharges payable by foreign investors have been increased in Queensland and New South Wales, with New South Wales also abolishing the indexation of land tax rate thresholds; while the Australian Capital Territory has introduced a payroll tax surcharge for large national and multinational businesses.
- Payroll tax exemptions for bulk-billing general practitioners have been announced or introduced in Victoria, South Australia and New South Wales. Housing affordability measures have also been increased or extended in Western Australia, South Australia, Queensland, the Australian Capital Territory and Tasmania.
- The Victorian Parliament has passed legislation to introduce the new commercial and industrial property tax, while the Northern Territory Legislative Assembly has passed legislation to transition royalties from a profit-based scheme to an ad valorem scheme. Otherwise, there have been no major changes to state and territory taxes and other imposts.
Victoria
Reiterating last year's transformational reforms
The Victorian Government delivered its Budget on Tuesday, 7 May 2024.
The Budget did not announce any new major tax changes or reforms, but indicated continuing commitment to those announced in last year's Budget:
- replacing stamp duty with an annual property tax for commercial and industrial properties;
- gradually abolishing business insurance duty; and
- lifting the payroll tax-free threshold.
Parliament has since passed the Commercial and Industrial Property Tax Act 2024 (Vic), replacing stamp duty with an annual property tax for commercial and industrial properties. For more detail on this reform, see our earlier Insight.
Payroll tax changes
The State Taxation Amendment Act 2024 (Vic) has introduced a new limitation that prevents a non-government school that the Minister for Education has not declared exempt (and non-profit organisations providing educational services to those schools) from receiving a payroll tax exemption as a religious institution (or non-profit organisation).
After delivering its Budget, the Government also announced that an exemption from payroll tax would be given for payments to general practitioner employees or independent contractors providing bulk-billed consultations from 1 July 2025. Before then, the Government will provide ex gratia relief for:
- any outstanding or future assessment for payroll tax on payments to contractor general practitioners up to 30 June 2024; and
- a 12-month extension of that effective exemption for any general practice that has not already received advice and begun paying payroll tax on such payments.
Land tax exemption for social and emergency housing
The State Taxation Amendment Act 2024 (Vic) has introduced new land tax exemptions from 2025 for land that is used to provide social or emergency housing, or vacant land owned by a charitable institution declared to be held for future use as social or emergency housing. These exemptions will complement the existing charity and public statutory authority exemptions, and ensure that private providers of social or emergency housing are also exempt from land tax.
Western Australia
The Western Australian Government delivered its Budget on Thursday, 9 May 2024.
It included an increase to the thresholds for the first home owner transfer duty concession. There were no other tax changes.
The Budget also announced that the Government would not proceed with a road user charge for zero and low emissions vehicles, in light of a High Court decision that a similar charge Victoria had imposed was constitutionally invalid. For more details on that decision, see our earlier Insight.
The Parliament has now passed an Act containing the build-to-rent tax concessions announced in last year's Budget. For more details, see our earlier Insight.
Northern Territory
The Northern Territory Government delivered its Budget on Tuesday, 14 May 2024.
The Budget did not introduce any tax changes, but foreshadowed the passage of the Mineral Royalties Act 2024 (NT).
That Act, since passed, moves the Northern Territory from a profit-based royalties scheme to an ad valorem royalties scheme for new mines established from 1 July 2024 (ie existing mines are grandfathered under the profit-based royalties scheme).
South Australia
The South Australian Government delivered its Budget on Thursday, 6 June 2024.
The Budget announced only two tax changes:
- the abolition of value thresholds for the first home buyer conveyance duty exemption and the first home owner grant; and
- a payroll tax exemption from 1 July 2024 (following the end of an amnesty) for wages of general practitioner employees or independent contractors related to bulk-billed services.
The Statutes Amendment (Budget Measures) Bill 2024 (SA) has been introduced into Parliament to implement these changes.
Queensland
The Queensland Government delivered its Budget on Tuesday, 11 June 2024.
The Revenue and Other Legislation Amendment Act 2024 (Qld) has implemented four material tax changes announced in the Budget:
- Increase to foreign acquirer duty: The additional foreign acquirer duty on direct and indirect purchases of residential land increased from 7% to 8% starting 1 July 2024. The 10% concessional rate for listed landholder acquisitions correspondingly increased to 0.8%. Transactions occurring on or after 1 July 2024 are subject to the new rate, while transactions occurring before then will remain subject to the 7% rate, even if settlement occurs later. Queensland's rate is now aligned with Victoria and Tasmania, and exceeds the 7% rate in South Australia and Western Australia, but remains lower than the newly enacted 9% rate in New South Wales.
- Increase to land tax surcharge: The land tax surcharge for foreign companies, foreign trusts and absentees rose from 2% to 3% as of 30 June 2024. Despite this increase, Queensland's surcharge rate remains below the 5% rate in New South Wales and the 4% rate in Victoria, but is higher than the 2% rate in Tasmania and the 0.75% rate in the Australian Capital Territory.
- Payroll tax 1% discount for regional employers restricted: From 2024–25, businesses that pay Queensland taxable wages of more than $350 million on an annual basis will no longer be eligible for the 1% discount on the payroll tax rate for otherwise qualifying regional employers.
- Payroll tax 50% rebate for wages paid to apprentices and trainees extended: The 50% payroll tax rebate for wages paid to apprentices and trainees will be extended for 12 months until 30 June 2025.
The Budget and Act also include changes to eligibility thresholds for first home buyer concessions.
New South Wales
The New South Wales Government delivered its Budget on Tuesday, 18 June 2024.
The Budget announced three material tax changes, which the Revenue Legislation Amendment Act 2024 (NSW) has implemented:
- Increase to foreign purchaser and owner surcharges: From 2025, the foreign owner land tax surcharge will increase from 4% to 5%, and the foreign purchaser duty surcharge will increase from 8% to 9%. These will be the highest rates of any Australian jurisdiction.
- End of land tax threshold indexation: From 2025, the land tax threshold and premium rate threshold will no longer be indexed, and instead fixed at their 2024 values (ie a land tax threshold of $1,075,000 and premium rate threshold of $6,571,000). South Australia is now the only state to index land tax thresholds.
- Payroll tax exemption for bulk-billing general practitioners: Unpaid payroll tax liabilities for payments made to contractor general practitioners up to 4 September 2024 will effectively be waived. From 4 September 2024, a payroll tax rebate will be available for payments by medical centres to contractor general practitioners that meet bulk-billing thresholds (ie 80% of services in metropolitan Sydney and 70% elsewhere).
The Budget also announced that, following the increase to coal royalty rates from 1 July 2024 that was in the previous Budget, royalty deduction rates for coal beneficiation will be indexed to the annual change in the Sydney Consumer Price Index over the next three years. From that point, the deduction rates will not be indexed further.
Australian Capital Territory
The Australian Capital Territory Government delivered its Budget on Tuesday, 25 June 2024.
In addition to noting the Territory's ongoing tax reform program, under which conveyance duty rates are progressively decreased and general rates progressively increased, the Budget contained three material tax changes:
- Payroll tax surcharge: Introduction of a payroll tax surcharge for large national and multinational businesses will be brought forward by one year, to 2024–25. For 2024–25, the surcharge will be 0.25% for businesses with $50 million in Australia-wide wages, and 0.5% for businesses with Australia-wide wages above $100 million. From 2025–26, those rates will be 0.5% and 1% respectively.
- Restoration in rates for commercial properties: The Budget restores a single set of tax rates for all commercial properties from 2025–26. This ends the freeze in average rates for properties with an Average Unimproved Value (AUV) of $2 million or below, which commenced in 2020–21 as part of the Government's Covid-19 Economic Survival Package.
- Land tax rate adjustments and short stay levy: From 2024–25, a new land tax marginal rate threshold of $1 million AUV will be introduced, along with the adjustment of other marginal tax rates. Additionally, from 1 July 2025, a new short-term rental accommodation levy will be applied at a rate of 5% of a short-term rental property's gross revenue.
The Budget also includes housing affordability changes to conveyance duty exemptions and concessions. These specifically impact first home buyers, pensioners, people fleeing domestic and family violence, and people with severe disability and their carers.
Tasmania
Housing affordability measures
The Taxation Legislation (Affordable Housing and Employment Support) Act 2024 (Tas) has passed the Parliament to implement amendments including:
- exempting first home buyers from transfer duty until 30 June 2026 where the dutiable value of the property does not exceed $750,000; and
- raising the land tax tax-free threshold from $100,00 to $125,000.
The Act also extends the operation of a number of existing tax provisions, including:
- the duty concession for eligible pensioners to sell their existing home and downsize to a new home, for a further one year to 30 June 2025;
- the three-year land tax exemption for newly built housing made available for long-term rental, for a further two years to 30 June 2026;
- the one-year land tax exemption for former short-term accommodation converted to long-term rental, for a further two years to 30 June 2026; and
- the payroll tax rebate available for youth employees, apprentices and trainees, for one year to 30 June 2025.
The Taxation Legislation (Miscellaneous Amendments) Act 2024 (Tas) has also passed the Parliament introducing a 50% transfer duty concession for buyers of new or off-the-plan apartments valued up to $750,000 from 1 July 2024 to 30 June 2026.
Budget announcements
The Tasmanian Government delivered its Budget on Thursday, 12 September 2024. The Budget reannounced the housing affordability measures already enacted by the Parliament.
In relation to other tax reform, the Budget states that the Tasmanian Government is consulting on the proposed introduction of a 5% short-stay accommodation levy, and has paused work on a road user charge for zero and low emission vehicles as it considers the implications of the High Court's decision on a similar charge imposed by Victoria. For more details on that decision, see our earlier Insight.
Otherwise, the Budget included a commitment from the Tasmanian Government not to introduce new or increase existing taxes.