KW Insights | 2021 Victorian Government Budget Analysis
The Victorian State Government has delivered its 2021 budget, and there’s some key takeaways for individuals, investors and businesses.
Business
Payroll Tax:
The introduction of the Mental Health & Wellbeing Levy will see large employers (payroll above $100 million) will see an extra 0.5% Payroll Tax Surcharge be added to their payroll tax assessments from 1 January 2022.
For smaller employers, the annual payroll tax threshold will increase from $650,000 to $700,000, and for regional employers, the rate of tax applicable will reduce from 2.02% to 1.25%, both from 1 July 2021.
Business Resilience Package:
A further $262 million (in addition to the previously provided $3 billion) has been allocated to the various elements within the package. This includes:
- Small Business Digital Adaptation Program
- Outdoor Eating and Entertainment Package
- Licenced Hospitality Venue Fund
- Melbourne City Recovery Fund
- Third round of the Business Support Fund
- Grants for Business Chambers and Trader Groups
Hospitality Voucher Scheme:
For CBD hospitality venues, another $7.4 million worth of vouchers are set to be rolled out through the scheme to help bring life back to Melbourne’s famous hospitality scene.
Individuals & Investors
Land Tax:
For properties valued at between $1.8 million and $3 million, the marginal rate of land tax will increase by 0.25% from 1.3% to 1.55%. For properties valued over $3 million, the top rate of tax will also increase by 0.3% from 2.25% to 2.55%. This is expected to begin from 1 January 2021. The general land tax threshold will also increase from $250,000 to $300,000, however the threshold for land held on Trust remains unchanged at $25,000.
Windfall Gains Tax from Rezoning:
1 July 2022 will see the introduction of a new Windfall Gains Tax which will apply to properties where the value is boosted by more than $100,000 due to council re-zoning. The tax will be phased in from value increases from $100,000, up to 50% where the windfall value is above $500,000. Land subject to the Growth Areas Infrastructure Contribution will not be affected however.
Vacant Residential Lan Tax Exemption:
The current tax exemption for Vacant Residential Land for new developments will be extended for up to 2 years from 1 January 2022.
Stamp Duty:
A new premium stamp duty will be introduced for property transfers above $2 million. This will increase stamp duty payable to $110,000 + 6.5% of the value in excess. This sees an increase in 1.0% in the rate of tax for premium value property.
A temporary stamp duty concession will be available for buyers of new residential property within the City of Melbourne local government area, where the dutiable value is equal to or less than $1 million. The concessions of 50% apply for new residential properties (contracts entered into from 1 July 2021 to 30 June 2022), whilst a full exemption applies for new residential properties that have remained unsold since completion (contracts entered into from 21 May 2021 to 30 June 2022).
Off-The-Plan Duty Concession:
The Off-The-Plan Duty Concession eligibility threshold has been temporarily increased to $1 million for all home buyers (contracts entered into from 1 July 2021 to 30 June 2023).
To discuss any of the Victorian State Government Budget measures and how they impact you or your business, please don’t hesitate to reach out to your King & Whittle advisor.