Amendments to Victorian Duties and Land Taxes – The State Taxation Acts Amendment Act 2019
By Evelyn Marcou, Senior Associate, MST Lawyers
The introduction of new provisions into the Duties Act 2000 (the Act) provides for a concessional rate of land transfer duty where there are transfers of commercial and industrial land located wholly in regional Victoria. The concession is to be gradually increased between 2019 and 2023. Contracts entered into between 1 July 2019 and 1 July 2020, will receive a concession of 10%. For Contracts entered into from 1 July 2020 to 1 July 2021 the concession will be 20%. The concession will continue at 10% increments annually until a 50% increase applies to Contracts entered into from 1 July 2023. Any reduction in land transfer duty is subject to the land being used solely or primarily for a ‘qualifying use’, roughly equating to commercial or industrial land, for a continuous period of at least 12 months.
The qualifying use must commence within two years of the owner becoming entitled to possession of the land. The Commissioner has the discretion to reduce the required period of qualifying use, determine that temporary cessation of qualifying use does not end the continuity of the use and can extend the period in which the use must begin. Where the use requirement has not been complied with, liability for the standard rates of land transfer duty will apply. This amount will be calculated from the date of non-compliance.
What Is Commercial And Industrial Property?
To be eligible for the concession, the property must fall into one of the accepted categories in the Australian Valuation Property Classification Code (AVPCC). The accepted codes or categories include:
- office premises;
- car parking;
- advertising or public information screens;
- manufacturing; and
- warehouses and storage yards.
The above list is not exhaustive, but it should be noted that it does not include agricultural land. The property must be used solely or primarily for the qualifying use as such; mixed-use properties may be eligible. The concession can also be applied to aggregated transactions if at least one of the transactions is eligible for the concession. The Act sets out a formula for calculating the pro-rata application of the concession to an aggregated transaction.
What Qualifies As Regional Victoria?
The Act defines regional property to include property located in one of the municipal districts listed in Schedule 1 of the First Home Owner Grant Act 2000. This designated area includes 48 Council areas, including the cities and surrounds of Ballarat, Bendigo, Geelong, the areas surrounding Gippsland, the Bass Coast and Macedon Ranges.
The concession cannot be applied in conjunction with any other concession. If the property acquisition is eligible to receive another exemption or concession under the Duties Act 2000, the purchaser must elect, at the time of stamping, which concession is to apply.
If you are considering acquiring commercial or industrial property in Victoria, please contact Evelyn Marcou by email or call +61 3 8540 0200.