The South Australian Treasurer, Tom Koutsantonis, commenced his budget speech on 18 June 2015 by declaring that “this government is embarking on the most comprehensive state tax reform in South Australia’s history”, which will make the State “a beacon for business investment”.

Specifically, the 2015-16 State Budget forecasts a return to surplus, while delivering:

A total infrastructure spend of $10.8 billion over four years, including

  • $3.3 billion on health facilities
  • $1.4 billion on road projects
  • $1.7 billion on water projects
  • $353 million on public transport
  • $216 million on education facilities
  • $197 million on the Adelaide Festival Centre precinct

A $985 million stimulus package, which includes:

  • a tax reform package that provides almost $670 million in tax reductions (over four years) by restructuring business taxes to help businesses invest, grow and create jobs
  • an injection of a further $315 million (over four years) into growth industries and targeted infrastructure projects, with the aim of stimulating the economy and creating jobs

Tax Reform

The cost of doing business in South Australia is set to fall substantially as a result of the State Government’s $670 million tax reform package.

Importantly, South Australia wants to become the first Australian jurisdiction to make all business property transactions tax-free by 1 July 2018.

The government has also confirmed that it has no plans to tax foreign investment, impose a broad-based land tax on residential property or introduce any other taxes.

Key reforms with respect to stamp duty include:

  • abolishing stamp duty on non-quoted marketable securities, better known as share duty (from 18 June 2015)
  • abolishing stamp duty on the issue, redemption and transfer of units in a unit trust (from 1 July 2018)
  • abolishing stamp duty on non-real property transfers (from 18 June 2015)
  • providing a stamp duty exemption and expanding the corporate reconstruction relief eligibility criteria to:

    - remove the requirement that substantially all assets be transferred in a reconstruction to qualify for  relief
    - amend the ‘corporate group’ definition for consistency with other jurisdictions
    - remove the requirement that the corporate group satisfy the association test for a period of three years - pre the reconstruction and a further three years post the reconstruction  
    (effective from 18 June 2015)

  • phasing out stamp duty on non-residential property transfers, by:

    - reducing duty rates by one third from 1 July 2016
    - reducing duty rates by a further one third from 1 July 2017

    before abolishing by 1 July 2018

  • removing the $1 million landholder model threshold for transfers of control in landholding entities, which, in conjunction with other announcements, will result in duty only being payable on the transfer of control in entities which own residential and primary production land (effective from 1 July 2018)

Other stamp duty reforms include:

  • introducing concessional stamp duty (capped at $1,000) on the transfer of retention tenements (effective from 18 June 2015)
  • abolishing stamp duty on the transfer of mining exploration licences and mining tenements (effective from 1 July 2018)
  • expanding the stamp duty exemption for farms transferred between family members to include transfers to certain trusts (effective from the date the legislation receives royal assent)
  • expanding the definition of family groups for duty purposes to include de facto couples and domestic partners (effective from the date the legislation receives royal assent)
  • introducing legislative stamp duty exemptions (to replace ex gratia relief) for disability service providers, incapacitated persons, as well as property donations to charities (effective from the date the legislation receives royal assent)
  • introducing an exemption from conveyance duty on the transfer of properties into Special Disability Trusts for no consideration and for use as the principal place of residence of the beneficiary (effective from 1 July 2015)

Other tax related announcements include:

  • increasing land tax thresholds by approximately 2.5%, thus increasing the tax-free threshold from $316,000 to $323,000 (effective from 1 July 2015)
  • introducing an exemption from land tax on properties held in Special Disability Trusts (effective from 1 July 2015)
  • extending the small business payroll tax rebate (of up to $9,800) available to employers with a taxable payroll of $1.2m or less to the 2015-16 year
  • amending the law to require a 50% payment of any tax in dispute (instead of 100% payment) before an appeal is able to be lodged (effective from the date the legislation receives royal assent)
  • introducing legislative relief for motor vehicle registration fees for vehicles used to transport incapacitated minors, to replace ex gratia relief (effective from the date the legislation receives royal assent)
  • abolishing the Save the River Murray Levy (effective from 1 July 2015)  

Tony Windle, National Head of Indirect Tax, E tony.windle@au.gt.com T +61 7 3222 0381