The Real Estate and Construction industry will be relieved to see they have been left alone in this budget and continue to hold out hope for the broader White Paper Tax Reform process.
The industry is most interested in what unfolds over the next 12 months with the White Paper Tax Review. The Government has acknowledged in its Re:Think Discussion Paper on tax reform that the tax burden placed on Property in Australia makes up 9% of Australia’s total tax take, with compares to the OECD average take of 5% from Property.
So while the industry will breathe a sigh of relief that there were no surprises in the 2016 budget, they will continue to put forward their argument for broader tax reform that leads to a simpler and fairer tax system that encourages growth in the industry.
Some of the Budget 2016 announcements relevant to the industry include :
- The Government will extend their GST compliance program with an injection of $265M in the next three years, will no doubt mean some of that additional review activity is focused on the development industry
- In a win for certain real estate investors, the Government announced that it would not implement a GST reverse charge system on the disposals of going concerns and farm land. As a result, purchasers will not have to pay higher stamp duty when they acquire commercial real estate that would otherwise have been GST free
- The Treasurer also reconfirmed prior announcements regarding the ATO’s new functions and responsibilities for approving foreign investment in residential real estate and maintaining a register of foreign investment in agricultural land. These measures along with charges imposed on foreign buyers were introduced as part of the initiative to Strengthen Australia’s Investment Framework
- The Managed Investment Trust (“MIT”) Regime has been deferred for yet another year to commence 01 July, 2016. Those wishing to elect for an earlier start date can adopt the new regime from 01 July 2015