The Victorian State Budget was handed down on the 23 May 2023 with a number of key changes affecting small business and individuals including payroll tax, land tax, stamp duty reform and Workcover.

The Government has announced a new COVID debt repayment plan aimed at management of the debt as a result of the pandemic over a temporary 10-year period. The levy will target two key areas around increased payroll tax on large business and increased land tax on taxable landholdings.

Payroll Tax

From 1 July 2023, a payroll tax levy surcharge of an additional 0.5% on Victorian wages will apply to business with annual taxable wages Australia wide above $10 million.

The payroll tax-free threshold will also increase from $700,000 to $900,000 from 1 July 2024, with a further increase to $1 million from 1 July 2025. This is estimated to reduce the amount of payroll tax for 22,000 business and reduce the burden of payroll tax altogether from 4,200 businesses.

Land Tax

The land tax threshold will be reduced from $300,000 to $50,000 with a range of additional temporary fixed charges as listed below. As a result, more landowners and properties will be subject to land tax. The changes will commence from 1 January 2024 and apply until 30 June 2033.

• $500 for land in value between $50,000 and $100,000
• $975 for land in value between $100,000 and $300,000.
• $975 plus 0.1% for the value of land above $300,000.

Existing land tax exemptions for the principal place of residence, primary production land and land used by charities will continue to apply.

Stamp Duty Reform – Non-Residential Property

There is a proposal to abolish the existing stamp duty structure to be replaced with an annual property tax on commercial and industrial properties. The first purchaser of a commercial property after 1 July 2024 will have the choice to either pay stamp duty under the existing system, or pay instalments over a 10 year period equal to stamp duty and interest via a Government facilitated loan.

Once the property enters the new system after 10 years, there will be no further stamp duty payable and the annual land tax of 1% of the land’s unimproved value will apply moving forward.

It must be noted that the new system will not apply to the purchaser of any commercial property prior to 1 July 2024.

Workcover

It was previously announced by the Government that the Workcover premium rate would be increased from 1.27% to 1.8% of remuneration to cover the increasing cost of claims and to ensure the program is sustainable over the long term.

Contributed by David Gow.