Another day, another budget announcement...this time from the Victorian Government. The big call-outs from Treasurer Tim Pallas yesterday were that big business will support a huge cash injection into mental health services through a new levy, and that infrastructure and public transport will benefit from targeted large-scale funding.
But what does the state budget package mean for you? We’ve summarised the relevant and important highlights from yesterday’s announcement into the following categories:
- How Will the Victorian Budget Impact Business?
- How Will the Victorian Budget Impact You as an Individual?
How Will the 2021 Victorian Budget Impact Businesses?
Payroll Tax Surcharge (Mental Health and Wellbeing Levy)
A payroll tax surcharge will be introduced on wages paid by Victorian businesses with national payrolls over $10 million a year. A rate of 0.5% will apply for businesses with national payrolls above $10 million, and businesses with national payrolls above $100 million will pay an additional 0.5%. The expected start date for this program is 1 January 2022.
Payroll Tax Threshold
It’s a different story for smaller businesses because the payroll tax threshold will increase from $650,000 to $700,000 from 1 July 2021, reducing tax for an estimated 42,000 small to medium-sized businesses.
Regional Employer Payroll Tax Rate
In an effort to reduce the tax burden for regional businesses, the regional employer payroll tax will reduce from 2.02% to 1.25% from 1 July 2021.
Business Resilience Package
The Victorian Government is continuing its support of businesses affected by COVID-19, through cash grants, tax relief and cashflow support as part of its Business Resilience Package. A further $262 million has been allocated in this budget, including $31 million to support ongoing COVID-safe activities.
New Distillery Door Grant Scheme
Good news for local distilleries (and drinkers of gin, vodka and scotch!) as a new Distillery Door Grant Scheme has been announced for the 2021-2022 and 2022-2023 financial years. Eligible claims will be paid to producers at the capped rate of $25 per litre of alcohol in eligible product sales sold through the ‘distillery door’. If the scheme is over-subscribed, the rebate per litre of alcohol will be reduced equally for all the eligible applicants.
Hospitality Voucher Scheme
For the CBD cafe and restaurant owners, another $7.4 million voucher scheme is set to be rolled out to entice Melburnians through the doors.
How Will the 2021 Victorian Budget Impact You as an Individual?
It’s all about property in this year’s state budget, starting with plans to increase the land tax for properties above $1.8 million in value. The marginal rate of land tax will increase by 0.25%; from 1.3% to 1.55% for properties valued between $1.8 million to $3 million. For properties valued above $3 million, the top rate of land tax will increase by 0.3%; from 2.25% to 2.55%. This is expected to begin for the 2022 land tax year.
General Land Tax Threshold
The general land tax threshold will increase from $250,000 to $300,000, while the land tax threshold for land held on trust remains unchanged at $25,000.
Windfall Gains Tax from Rezoning
From 1 July 2022, a new Windfall Gains Tax will be introduced for properties where the value is boosted by more than $100,000 due to council re-zoning. The new tax phases in for gains above $100,000 up to a rate of 50% for gains above $500,000.
Vacant Residential Land Tax Exemption
The Vacant Residential Land Tax Exemption for new developments will be extended to apply for up to two tax years. This is expected to begin in the 2022 land tax year.
A new ‘premium stamp duty’ rate of 6.5% will be introduced for property transfers above $2 million in dutiable value. This will increase stamp duty payable to $110,000 plus 6.5% of the dutiable value above $2 million. Currently, the highest rate of 5.5% applies to property transfers above $960,000.
Also note that the current concessions for transfers of residential property up to $1 million in value expires on 1 July 2021. The concession applies to genuine sales (not gifts) of property and can provide a 50% waiver of duty for new residential premises, or a 25% waiver for existing residential premises and vacant residential land.
Temporary Land Transfer Duty Concession
Temporary land transfer duty (stamp duty) concessions for new residential properties have been announced within the City of Melbourne local government area with a dutiable value up to $1 million.
This is in the form of a 50% concession for new residential properties and a full exemption for new residential properties that have remained unsold for 12 months or more since completion of construction. The concession applies to contracts entered into on or after 1 July 2021 and on or before 30 June 2022. The exemption applies to contracts entered into on or after 21 May 2021 and on or before 30 June 2022
Off-The-Plan Duty Concession
The eligibility threshold for the Off-the-Plan Duty Concession has been temporarily increased to $1 million for all home buyers. The concession applies to contracts entered into on or after 1 July 2021 and on or before 30 June 2023.
It’s important to note that some of these measures are set to pass but not yet legislated. To further discuss any of the above Victorian Budget measures and how they may impact you or your business, please get in touch with our Melbourne-based accounting and business advisors using the form below. We work closely with our other BlueRock divisions to provide a holistic strategy for founders, business owners and individuals wanting to plan a financially secure future.