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Victoria is moving ahead with plans to abolish stamp duty on commercial and industrial properties.
The move, which is meant to encourage businesses to invest and create jobs, was announced in Victoria’s 2023-24 state budget, and now being finalised following consultation with business and industry bodies.
Stamp duty will soon be replaced with a commercial and industrial property tax, which the government hopes will make it easier for new businesses to be set up, and for business owners to invest in new land and buildings.
The government estimates that the change will deliver a $50 billion benefit to the economy in cumulative net present value terms.
Commercial and industrial properties contracted from 1 July 2024 will transition to the new system. Stamp duty will still be liable on these properties – the final time stamp duty will be paid during a transaction for the property. The commercial and industrial property tax will then begin to be payable 10 years after the last stamp duty payment.
The tax rate will be set at a single flat rate of 1 per cent of a property’s unimproved land value, and exemptions applicable to the land tax will also apply.
The government will also offer a transition loan for eligible buyers to help with stamp duty payments, with the intention of freeing up capital for businesses transacting on properties where a final stamp duty payment is required.
The loan will be provided by the Treasury Corporation of Victoria on commercial terms with a fixed interest rate over 10 years. Annual repayments will be set upfront to provide certainty. Further details on the transition loan, including eligibility requirements, will be advised before 1 July 2024.
These reforms will not apply to properties whose primary purpose is residential, primary production, community services, sport, heritage or cultural, and existing stamp duty concessions for commercial and industrial properties, including the regional concession, will continue to be available.
The state’s Treasurer, Tim Pallas, acknowledged that stamp duty has often served as “a barrier for businesses wanting to invest and grow”.
“That’s why we are making this landmark change. We’ve worked with businesses to get the design right and look forward to the transition beginning,” the Treasurer said.
Victorian Chamber of Commerce and Industry CEO, Paul Guerra, said the government expected the change to “stimulate commercial property investment, development and upgrades by making more capital available”.
ABOUT THE AUTHOR
Juliet Helmke
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.
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