On 18 June 2024, the New South Wales State Government presented the State Budget for 2024/25.

Various tax measures were announced. Enabling legislation in relation to the taxation measures included in the New South Wales State Budget, the Revenue Legislation Amendment Bill 2024 (NSW) (Bill) were tabled on the same date.

Tax-free threshold for land tax to remain the same

The Government announced that indexation of land tax thresholds will cease.

For the 2025 land tax year commencing 1 January 2025, the tax-free threshold for land tax will be frozen at the 2024 level of $1.075 million and will no longer be indexed annually in line with property price changes.

The standard land tax rates in New South Wales are:

General threshold: $100 plus 1.6% of the land value above the general threshold of $1,075,000 up to the premium threshold; and
Premium threshold: $88,036 plus 2% of the land value above the premium threshold of $6,571,000.

This means that more landowners will be subject to land tax as property values rise. There is a requirement for the Treasurer to review the land tax thresholds by 1 June 2027.

Increase in foreign surcharges - stamp duty and land tax

The foreign purchaser duty surcharge will increase from 8% to 9% from 1 January 2025.

The surcharge applies to all foreign persons who buy residential property in New South Wales.

The foreign owner land tax surcharge will also increase, from 4% to 5% for the 2025 land tax year from 1 January 2025 for foreign owners of residential land as at 31 December 2024 and for subsequent land tax years.

Under the Bill, the new 9% surcharge for foreign purchasers (which takes the total stamp duty rate to 14.5% or 16% for premium properties above $3,505,000 in value) will apply for contracts or transfers of land after 1 January 2025.

If a transfer occurs after 1 January 2025 where there was a contract before 1 January 2025, the existing lower rates continues to apply. Likewise, if a transaction occurs under an option granted before 18 June 2024, the old rates continue apply even if the contract or transfer of land is entered into after 1 January 2025.

As a result, New South Wales now has the highest of all the surcharge rates across all States and Territories.

Any trustee of a discretionary trust that purchases residential property in New South Wales may need to consider amending the relevant trust deed to exclude foreign persons otherwise the foreign surcharges will apply to the purchase and holding of the residential land.

Payroll tax relief for general practitioner contractors

Previously the State Government had announced that it would pause audit activity for medical practices until August 2024. Refer to our article here for more detail on the recent changes to policy and administration for payroll tax for medical centres.

In the Budget the State Government has announced that it will exempt past, unpaid payroll tax liabilities for payments made to general practitioner (GP) contractors up to 4 September 2024.

From 4 September 2024, medical centres that meet requisite bulk-billing thresholds (of 80% in Metropolitan Sydney or 70% outside of Metropolitan Sydney) will be eligible for a payroll tax rebate associated with payments to contractor GPs.

More information is expected to be provided.

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Please contact us with any questions on the New South Wales State Budget 2024-25 or any other State Tax issues.

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au

Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au