In our analysis of the 2021-22 Victorian State Budget, which included a number of tax increases and new taxes, it occurred to us that Victoria could well be the highest taxing State or Territory in Australia for developers, and we were not far wrong.
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The table below outlines the various taxes that developers will now be subject to, comparing across all States / Territories, with the bolded items showing the highest rate or only tax of its kind. For ease of comparison, we have adopted the Victorian nomenclature, noting that each State and Territory has its own label for similar taxes.

Potential property developer taxes

Top tax rate

VIC

Transfer duty on a direct transfer
of land, fixed assets and goods

6.5%

 

Landholder duty on acquisition of
company or unit trust which holds land and fixed assets

6.5% ($1m land threshold)

 

Base land tax

2.55%

Tax on windfall gains upon
rezoning

50%

Growth Areas Infrastructure
Contribution (“GAIC”)

Approx $100k - $117k per hectare

Absentee Owner Surcharge
(“AOS”) for absentee owners (all
taxable land, not just residential)

2% (all taxable land)

Foreign Purchaser Additional
Duty (“FPAD”) for foreign
purchasers of residential land

8%

Vacant Residential Land Tax
(“VRLT”)

 

1% (although there are some temporary concessions for Melbourne CBD)

Economic Entitlements (ie a tax
on developer agreements)

6.5%

 

Fixed Assets (ie a tax on the
transfer of fixed plant and
equipment even if there is no
underlying interest in land)

6.5%

 

FPAD payable on intention to use
the land as residential (which
has unlimited timeframe)

8%

 ACT

Transfer duty on a direct transfer
of land, fixed assets and goods

4.54% residential and 5% commercial ($1.5m commercial land threshold)

Landholder duty on acquisition of
company or unit trust which
holds land and fixtures

4.54% residential and 5% commercial ($1.5m commercial land threshold)

Base land tax

1.12%

AOS

0.75% (residential)


NSW

Transfer duty on a direct transfer
of land, fixed assets and goods

7% (residential over $3.101m) and 5.5% on rest

 

Landholder duty on acquisition of
company or unit trust which
holds land, fixed assets and
goods

5.5% ($2m land threshold)

AOS

2% (residential)

 

FPAD

8%

NT

Transfer duty on a direct transfer
of land, fixed assets, business
assets and goods

5.95%

 

Landholder duty on acquisition of
company or unit trust which
holds land, fixed assets and
goods

5.95% ($500k land threshold)

 

Base land tax

Nil

Property Activation Levy on
vacant land in Darwin CBD and
1% for unoccupied, non-
residential buildings

2%

QLD

Transfer duty on a direct transfer
of (or interest in a trust which
holds) land, fixed assets,
business assets and goods

5.75%

 

 

Landholder duty on acquisition of
company which holds land and
fixed assets

5.75% ($2m land threshold)

Base land tax

2.75%

AOS

2% (all taxable land)

FPAD

7%

SA

Transfer duty on a direct transfer
of residential or primary
production land

5.5%

 

 

 

Landholder duty on acquisition of
company or unit trust which
holds residential or primary
production land

5.5% (no land threshold)

 

Base land tax

2.4%

FPAD

7%

TAS

Transfer duty on a direct transfer
of land, fixed assets and goods

4.5%

 

Landholder duty on acquisition of
company or unit trust which
holds land, fixed assets and
goods

4.5% ($500k land threshold)

 

Base land tax

1.5%

FPAD

8% (residential)
1.5% (primary production)

FPAD payable on intention to use
the land as residential or primary
production (3 years from
purchase)

8% (residential)
1.5% (primary production)

WA

Transfer duty on a direct transfer
of land, fixed assets, business
assets and good

5.15%



Landholder duty on acquisition of
company or unit trust which
holds land, fixed assets and
goods

5.15% ($2m land threshold)

Base land tax

2.67%

Metropolitan Region
Improvement Tax on property
located in metropolitan area

0.14%

 

Duty in relation to use of Fixed
Infrastructure Rights

5.15%

 

FPAD

7%

 

 

As one of the first States and Territories to release their Budgets for 2021-22, it will be interesting to see how these tax increases compare to the other States, and how this may impact on the property sector’s intent to invest in Victoria in the future. It will be particularly interesting to note the differences in approach going forward, with Victoria seeming to choose increased stamp duties, with jurisdictions such as ACT and NSW favouring a broad based land tax. One senses further divergence among State and Territories in relation to their tax base, not harmonisation.

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