South Australian State Budget – sweeping changes to stamp duty
On Thursday 20 June 2015, the South Australian State Government handed down the 2015/2016 Budget, and announced fundamental changes to the application of stamp duty. These stamp duty announcements were the Government’s first response to the broader South Australian State Tax Review conducted earlier this year, and have been well received by both the property industry and business generally.
For the property sector, the key announcement was the decision to phase out stamp duty on commercial property transfers, by:
- reducing duty rates by one third from 1 July 2016 and
- reducing duty rates by a further one third from 1 July 2017
before abolishing stamp duty on all commercial property transfers from 1 July 2018.
As South Australia is the first state to embrace such extensive stamp duty reform, it is expected the announcement will provide a much needed stimulus for local, interstate and foreign investment in South Australian commercial property.
In addition to the decision to remove stamp duty on commercial property transfers, the South Australian Government will eliminate stamp duty on all non-real property transfers, including on marketable securities, from 18 June 2015. Together, these changes provide a green-light for business investment in South Australia.
ESL increase
Whilst the changes to stamp duty announced in the Budget are welcomed, in May 2015 Treasurer Tom Koutsantonis announced an increase in the Emergency Services Levy (ESL) to $285.7 million for 2015-16, up $19.8 million on the previous financial year. The additional funds will be used to cover costs incurred as a result of the Sampson Flat bushfires in January earlier this year, as well as provide extra equipment, training and workers’ compensation funding for the CFS.
The hike will equate to a 9% increase for most metropolitan residential property owners ($426,000 property value) while commercial property owners will see a 10% rise ($1.5 million property value) and those with industrial property, a 7% upward shift ($1.2 million property value).
While this current announcement is not as dramatic as the increase in the ESL seen last year, it has nevertheless been met with concern from the property industry.
Future development opportunities
The property sector continues to be buoyed by announcements of new development opportunities, including the most recently publicised Government led redevelopment of the existing Royal Adelaide Hospital site on North Terrace. Coupled with the latest approved development on the former LeCornu site at North Adelaide, and proposed residential developments at both West Lakes and Glenunga, these announcements indicate encouragingly that the pipeline of future work for the construction sector continues to grow.
