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As part of the state budget released today (23 May), the Victorian government has announced plans to abolish stamp duty for an annual property tax to support businesses.
The Victorian government will abolish stamp duty for commercial and industrial properties and replace it with an annual property tax in a bid to inject $50 billion into the state economy.
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The decision is part of the State’s Economic Growth Package in today’s (23 May) Victorian budget 2023/24.
From 1 July next year, commercial and industrial properties will transition to the new system as they are sold, with the annual property tax to be payable from 10 years after the transaction.
Under the new system, the first purchaser of a commercial or industrial property after 1 July 2024 will have the option to choose to either pay the property’s final stamp duty liability as an upfront lump sum or opt to pay fixed instalments over 10 years equal to stamp duty and interest with a government-facilitated transition loan.
The introduction of the annual payment system aims to provide businesses with more capital that can be invested in expanding operations and hiring additional workers and ultimately boost economic activity, job creation, and overall prosperity.
Victorian Treasurer Tim Pallas said the changes would remove barriers to larger investments and accelerate business growth.
“We’re removing barriers to larger investments, accelerating business growth and helping our economy grow even stronger,” Mr Pallas said ahead of the release of the state budget on Tuesday (23 May).
“Business and industry have told us they want this reform and we’ve listened.”
These arrangements will not apply to the current owner of any commercial or industrial property purchased before the middle of next year.
Once a property enters the new system after this time, stamp duty will never again be payable on a transaction and the annual property tax will apply.
The annual property tax, which will replace stamp duty, is set at a flat rate of 1 per cent of the property’s unimproved land value.
Welcoming the announcement, Victorian Chamber of Commerce and Industry chief executive Paul Guerra said the tax will help businesses “accelerate building upgrades, stimulate investment in commercial property and free up more capital”.
The government will consult with business and industry in coming months, with the final form of the transition to be detailed by the end of the year.
[Related: NSW govt to raise stamp duty threshold]
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