NSW State Budget 2024-25: Key changes to state taxes

On Tuesday, 18 June 2024, the Hon Daniel Mookhey, MLC, handed down the NSW State Budget for the fiscal year 2024-25.

To enact the following Budget measures relating to state taxes, the Government has introduced the Revenue Legislation Amendment Bill 2024.

1. NSW Surcharge Purchaser Duty and surcharges on acquisitions payable by foreign persons increase from 8% up to 9%

From 1 January 2025, the foreign surcharge purchaser duty will increase from eight per cent to 9%. This will become the highest rate of foreign person duty surcharge across any state or territory.

Surcharge purchaser duty applies to residential land, use the definition of residential land in the surcharge purchaser duty provisions.

For purchases of land by a trustee of a discretionary trust, ensure that the discretionary trust deed is drafted correctly to exclude foreign persons as beneficiaries prior to the purchase of the property.  A deed of variation/amendment to the trust thereto may be required if there isn’t one already.

Also check the Visa type held by the foreign person, and if the foreign person needs to meet the 200-day rule to determine if there is a surcharge liability to begin with.

2. NSW Surcharge Land Tax payable by foreign owners increase from 4% to 5%

From the 2025 land tax year, the foreign owner land tax surcharge will increase, from four per cent to 5%. This will become the highest rate of foreign person land tax surcharge across any state or territory. However, the surcharge will continue to only be imposed on residential land, unlike the land tax surcharge in Victoria and Queensland which applies to all types of land owned by foreign persons (e.g., commercial land).

3. NSW land tax thresholds – administrative indexation arrangements

Freeze the tax threshold and premium rate threshold for land tax for years after 2024.

From the 2025 land tax year, administrative indexation arrangements will apply and will be aligned with most other jurisdictions by fixing the land tax thresholds at their 2024 land tax year values.

For the 2025 and subsequent land tax years, the land tax threshold will remain at $1,075,000 and the premium rate threshold will remain at $6,571,000 (being the thresholds for the 2024 land tax year).

The NSW 2024 Land Tax thresholds are below:

• Tax Free General Threshold is $1,075,000

Subject to any land tax exemptions or concessions applying, the NSW land tax on the taxable value above the tax-free threshold is at a rate of $100 + 1.6% up to the Premium Rate Threshold.

• Premium Rate Threshold is $6,571,000

Subject to any land tax exemptions or concessions applying, the NSW land tax rate is $88,036 + 2% of the taxable value above the Premium Rate Threshold.

4. NSW Payroll tax relief

• The budget bill provides for an exemption for past payroll tax that remains unpaid if it relates to certain general practitioners, and
• The budget bill provides for a rebate of payroll tax for employers for the wages of general practitioners who work in a medical centre if the majority of general practitioner services provided through the medical centre are bulk billed.

The NSW Government will exempt past, unpaid 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 will be eligible for a payroll tax rebate associated with payments to contractor GPs.

Medical centres paying wages to contractor general practitioners (GPs) will receive payroll tax relief:

• For unpaid payroll liabilities prior to 4 September 2024, an exemption from payroll tax.
• From 4 September 2024, a rebate for payroll tax on wages on contractor GPs if the medical centre meets certain bulk billing thresholds:
  • At least 80% of services if located in metropolitan Sydney;
  • At least 70% of services if located elsewhere.

DISCLAIMER

This article provides general information and should not be considered professional advice. For personalised advice based on your individual circumstances, please contact Mira Brewster or Sam Mohammad.