The West Australian government has indicated that changes to stamp duty are off the agenda for the foreseeable future, but an industry body is imploring for a review of the tax imposed on small business sales.
A long-time advocate for stamp duty reform, the Real Estate Institute of Western Australia (REIWA) is calling for the state government to follow in the footsteps of Victoria, NSW, the ACT, Tasmania and South Australia in eliminating stamp duty when small businesses change hands.
It would apply to entities with business assets worth less than $10 million or an annual turnover of less than $5 million.
Premier Mark McGowan has said his government has no intention of implementing major tax reform during the pandemic.
REIWA pointed out that under the current state laws, a buyer who purchases a small business in Western Australia with assets worth $5 million is required to pay $251,415 in stamp duty. Those savings could have a material effect on a company of that size, enabling them to pay the annual salary of five full-time staff members or train 10 apprentices.
“As one of the only places in the country that still collects stamp duty on business assets, we are creating a business environment that is less competitive than the eastern states and placing a cost burden on small businesses which discourages productivity and the entrepreneurial spirit,” REIWA president Damian Collins said.
He called the measure a “quick win” for the West Australian economy and said it was unfortunate the state’s latest budget indicated stamp duty reform was not on the cards.
“Whilst we can appreciate these are uncertain times and a degree of caution is required as we transition to living with COVID-19 in the community, it feels like a missed opportunity to take stamp duty reform off the table altogether given the state’s enviable financial position,” Mr Collins said.
He noted that using the pandemic as a reason for delaying tax reform talks was particularly harmful to the entities that had borne the brunt of lockdowns and decreased tourism.
“Whilst overall WA has been incredibly fortunate throughout the pandemic, those who have been hit hardest by lockdowns and restrictions have been small businesses. They need our support more than ever, especially as borders open and some restrictions return,” Mr Collins said.
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Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.