The Victorian State Budget was handed down on 20 May 2021.

 

Victoria has recorded a deficit of $17.4 billion in the 2020-21 financial year and is forecast to remain in a shortfall until at least 2025. This is not as high as was forecast last year, with a $23.3 billion deficit initially predicted. The reduced deficit means Victoria has rebounded quicker than expected from the COVID-19 pandemic.

 

Here is our summary of what may impact you…

 

Payroll Tax

• A payroll tax surcharge will be applied on wages paid in Victoria by businesses with national payrolls over $10 million a year. The levy is expected to commence from 1 January 2022.

A surcharge rate of 0.5% will apply for businesses with national payrolls above $10 million

A surcharge rate of 1% will apply for businesses with national payrolls above $100 million

The increase in the payroll tax threshold to $700,000 will be brought forward to 1 July 2021.

The reduction in the regional employer payroll tax rate to 1.2125% will be brought forward to 1 July 2021.

Businesses with an annual payroll tax liability of less than $100,000 can elect to report and pay payroll tax annually instead of monthly. This is expected to commence from 1 July 2021.

 

Land Transfer Duty (Stamp Duty)

• A new premium stamp duty rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million. This will apply to contracts entered into from 1 July 2021.
• A 50% concession will be available for new residential properties within Melbourne local government area. This will apply to contracts entered into between 1 July 2021 and 30 June 2022. This concession will only apply to properties with a dutiable value of up to $1 million.
• A full exemption will be available for new residential properties that have remained unsold for 12 months or more since completion of construction with Melbourne local government area. This will apply to contracts entered into between 21 May 2021 and 30 June 2022. This concession will only apply to properties with a dutiable value of up to $1 million.

 

Land Tax Changes

• The land tax rates for high value landholdings will increase from the 2022 land tax year:
• The general land tax tax-free threshold will increase from $250,000 to $300,000. This will increase from the 2022 land tax year.
• The vacant residential land tax exemption for new developments will be extended to apply for up to two tax years. This will be extended from the 2022 land tax year.

 

Other Taxes

 

A new windfall gains tax of up to 50% to be applied to planning decisions to rezone land from 1 July 2022. The total value uplift from a rezoning decision will be taxed at 50% for windfalls above $500,000, with the tax phasing in from $100,000. This is expected to commence from 1 July 2022.