The Honourable Treasurer Rob Lucas delivered South Australia’s State Budget on Tuesday 18 June 2019. Likened to a person wearing overalls and a high-vis vest, this Budget invests heavily in infrastructure while also proposing significant changes to the current land tax regime.

The State of the South Australian Economy

• $94m Budget surplus forecast for 2019-20, with debt growing by more than $3b to $9.5b.
• $2.1b reduction in GST revenues to South Australia since the 2018-19 Mid-Year Budget Review.
• $184m reduction in conveyance duty since the 2018-19 Mid-Year Budget Review.
• The State’s economy is expected to grow by 2.25% each year between now and 2022-23 with employment growth remaining flat at 1%.

Infrastructure Investments

• $11.9b in infrastructure spending to build new metropolitan and regional roads and deliver infrastructure projects.
• $1.4b in schools and VET infrastructure.
• $1.1b over 8 years on regional road projects and transport infrastructure upgrades.
• $834m to improve road safety in metropolitan and regional areas.
• $550m provisioned to commence the construction of a new Women’s and Children’s Hospital.
• $537m in a new health spending, including reactivating the Repatriation General Hospital Site.

Other Investments

• $104.5m for a housing sector package to support home buyers, builders and associated trades in the housing market.
• $52.4m to protect and secure metropolitan beaches such as West Beach and also fund a range of regional coastal works.
• $24m for a racing industry support package.

Land Tax

• The existing top land tax rate will be progressively reduced from 3.7% in 2019-20 to 2.9% from 1 July 2027.
• Proposed amendments to the Land Tax Act 1936 commencing 1 July 2020 include:
  • Aggregating an owner’s interest in every piece of land, rather than only aggregating those properties that are held in the same ownership structure;
  • Introducing provisions to allow two or more related companies to be grouped for land tax purposes; and
  • Introducing a surcharge on land owned in trusts where the interests in land of trust beneficiaries are not disclosed or cannot be identified. Exceptions will be provided for certain trusts.
• We understand the proposed land tax grouping measure is causing significant concern for land holders in South Australia who own multiple properties through related vehicles. We are awaiting detail about how the grouping rules will ultimately work to determine the extent and breadth of the grouping provisions to better advise clients on the appropriate holding structure for them.

Payroll Tax

• An additional compliance program focusing on business who have failed to register for payroll tax, the use of contractors, the grouping of businesses and other high risk areas.

Planning, Transport and Infrastructure

• A once-off 5% increase to motor vehicle registration fees and charges will be applied in 2019-20.
• Administration fees for transactions under the Motor Vehicles Act 1959 will increase from 1 July 2019.
• A staged removal of the outer area concession for motor vehicle registrations, with a 50% reduction of the concession in 2019-20 and removal of the concession in 2020-21.