Victorian Budget 2019/20 – Royal Assent is received
The State Taxation Acts Amendment Bill 2019 (Vic) has received royal assent on 18 June 2019.
Following this, the measures outlined below will take effect from 19 June 2019:
Significant changes to the economic entitlement provisions
The economic entitlement provisions have been amended to apply to all landholders including where land is held by individuals, discretionary trusts and self managed superannuation funds who enter into an arrangement for Victorian land valued $1 million or more. There is no longer any percentage threshold to trigger duty under these amended provisions.
Duty on fixtures
Duty will be imposed on the transfer of fixtures only valued $2 million and over.
Removal of the principal place of residence exemption for neighbouring vacant land
The availability for a principal place of residence exemption from land tax to contiguous vacant land in metropolitan Melbourne areas will be removed (albeit, this measure won’t apply until the 2020 land tax year).
Increasing the value of heritage listed land (to increase land tax)
The Valuation of Land Act 1960 (Vic) will be amended to remove special provisions for calculating the value of land on which a heritage building is situated or the removal of such a building is prohibited in response to the Victorian Civil and Administrative Tribunal decision in ISPT Pty Ltd v Melbourne City Council  VCAT 1470 (GPO Building Case). This would allow the site value of heritage properties to be determined according to their highest and best use, taking into account the effects of the heritage status.
Further amendments that take effect from 1 July 2019 include:
Increase in foreigner duty and land tax surcharges
Foreign duty and land tax surcharges will be increased, with foreign purchaser duty surcharge rates going up from 7% to 8%. Foreign owners will also face an increase in the land tax absentee surcharge from 1.5% to 2% from the 2020 land tax year.
Changes to the corporate reconstruction exemption
The corporate reconstruction exemption will be removed and replaced with a 90% duty concession (i.e. duty will be imposed at a rate of 10% of duty otherwise payable). More details on how this will affect corporate reconstruction and consolidations going forward is outlined here.
For a full update on the changes contained in the budget, please refer to our article here.
If you have any questions, please contact one of the members of our specialist team: