2021-22 Victorian State Budget overview

New windfall gains tax

From 1 July 2022, where a property’s value is boosted as a result of council rezoning, the property owner may be hit with a new windfall gains tax of up to 50%.

The full 50% tax will apply where the total value uplift from a rezoning decision that occurs after 1 July 2022 is above $500,000, with the tax phasing in for windfalls of $100,000.

New ‘premium’ stamp duty rate for property transfers over $2 million

For contracts entered into from 1 July 2021 where the property is valued at over $2 million, purchasers will now be subject to a new ‘premium’ stamp duty rate of $110,000 plus 6.5% of the dutiable value in excess of $2 million (up from the current flat 5.5% rate).

New concessions for the Melbourne local government area

A land transfer duty concession of up to 100 per cent will be available for purchases of new resident properties in the Melbourne local government area valued up to $1 million.

Transfers of new residential property that has been unsold for more than 12 months since completion will be eligible for a 100 per cent concession for contracts entered into from 21 May 2021 to 30 June 2022.

Transfers of new residential property that has been unsold for less than 12 months since completion will be eligible for a 50 per cent concession for contracts entered into from 1 July 2021 to 30 June 2022.

Temporary eligibility threshold increase for the off-the-plan duty concession

For contracts entered into from 1 July 2021 to 30 June 2023, the threshold for the off-the-plan stamp duty concession will be increased to $1 million (noting that the other eligibility criteria is to remain unchanged).

Land tax changes

From 1 January 2022, the tax-free threshold for general land tax will increase from $250,000 to $300,000. However, also from this date, the land tax rate will be increased by 0.25 percentage points for taxable landholdings between $1.8 million and $3 million, and by 0.30 percentage points for taxable landholdings of over $3 million.

In addition, from 1 January 2022, the vacant residential land tax exemption will be extended for up to two years for new developments.

New Mental Health and Wellbeing Levy

The new Mental Health and Wellbeing Levy will apply from 1 January 2022 and will be implemented as a 0.5 per cent payroll tax surcharge of on wages paid in Victoria by businesses with national payrolls of over $10 million. Businesses with national payrolls of over $100 million will be subject to an additional 0.5 per cent. The surcharge rates will be payable on the Victorian share of wages above the relevant threshold.

Other payroll tax changes

The payroll tax tax-free threshold increase from $650,000 to $700,000 will be brought forward from 1 July 2021.

In addition, the regional employer rate will reduce from 2.02 per cent to 1.2125 per cent from the same date.

If you have any questions please speak to your usual Mazars adviser or contact our Tax and specialists via the form or contact details below:

Author: Jennifer Ferguson

Published: 21/05/2021

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