The Victorian Victorian Government has released another big-spending budget in its continued efforts to fund Victoria’s COVID-19 recovery. Key announcements include:
- Big business to pay for mental health funding
- Increase to payroll tax threshold
- Stamp duty and land tax hikes for high value properties.
Summary of key areas
Mental health funding
New Mental health and wellbeing levy (payroll tax surcharge) on wages paid in Victoria by businesses with more than $10 million in national wages to help fund $3.8 billion for mental health. Expected start date 1 January 2022.
Summary of rates
- Rate of 0.5 per cent on Victorian wages on national wages between $10 million to $100 million
- Additional 0.5 per cent on Victorian wages on national wages greater than $100 million.
Increase to payroll tax threshold
- Payroll tax-free threshold lifted to $700,000 for small businesses earlier than planned. Expected start date 1 July 2021.
- The regional employer payroll tax rate will be reduced to 1.2125 per cent. Expected start date 1 July 2021.
New stamp duty and property taxes for high value properties
- Landowners to receive tax cuts due to an increase in the general land tax-free threshold from $250,000 to $300,000. The land tax threshold for land held on trust remains unchanged at $25,000. Expected start date 2022 land tax year.
- Land tax rates for high value landholdings exceeding $1.8 million will increase by 0.25 percentage points for taxable landholdings exceeding $1.8 million, and 0.30 percentage points for taxable landholdings exceeding $3 million. Expected start date 2022 land tax year.
- Vacant residential land tax exemption for new developments to be extended to apply for up to two tax years. Expected start date 2022 land tax year.
- Hike on stamp duty for property transactions valued above $2 million, increasing stamp duty payable to $110,000 plus 6.5 per cent of the dutiable value over $2 million. Expected to apply to contracts entered into on or after 1 July 2021.
- A new windfall gains tax to be introduced for properties whose value is boosted by more than $100,000 due to council rezoning decisions. The total value uplift will be taxed at 50 per cent for windfalls above $500,000, with the tax phasing in from $100,000. Expected start date 1 July 2022.
Opportunities and challenges for businesses and landowners
The Victorian State budget presents both opportunities and challenges to businesses and landowners and with the cessation of the Federal and State Governments’ COVID-19 stimulus measures (i.e. JobKeeper, Cashflow Boost, Payroll Tax waivers, rent and finance payment deferrals etc), forward planning and cashflow management will be vital in the survival and recovery in the post-Covid era.
We are here to partner with you to navigate the challenges the next 12 months presents. Please contact your advisor to discuss your situation or contact us via the general enquiry form.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.