Linkedin
Facebook
Email
more
On Tuesday, 11 June 2024, the Queensland Deputy Premier and Treasurer, the Hon Cameron Dick MP, handed down the Queensland State Budget for the fiscal year 2024-25. The State Budget includes significant tax measures, predominantly aimed at supporting first home buyers.
To enact the following Budget measures relating to state taxes, the Government has introduced the Revenue and Other Legislation Amendment Bill 2024.
1. Increase in Transfer Duty First Home Concession Threshold
Transfer duty (commonly known as stamp duty) is levied on dutiable transactions involving land in Queensland. Previously, first home buyers purchasing properties valued at $500,000 or less enjoyed a transfer duty concession of $8,750, exempting them from paying transfer duty. However, this concession gradually decreased by $875 for every additional $10,000 above $500,000 and ceased entirely for homes valued at $550,000 or more.
The State Budget extends eligibility for the transfer duty first home concession to homes with a dutiable value of up to $800,000 (previously $550,000). Under the new changes, first home buyers will pay no duty on homes valued up to $700,000 and will receive a partial concession for homes valued up to $800,000.
Additionally, first home buyers purchasing vacant land to build their homes will benefit from an extended first home vacant land concession. Previously, no transfer duty applied to land with a dutiable value of $250,000 or less, and the quantum of the concession was gradually reduced where the dutiable of the land exceeded $250,000 but was less than $400,0001.Now, eligibility for the first home vacant land concession extends to vacant land with a dutiable value of up to $500,000, with a full duty exemption applicable to land valued up to $350,000, and a partial concession applies to land valued between $350,000 and $500,000.
These changes increase the maximum value of the first home concession to $17,350 and the maximum value of the first home vacant land concession to $10,675.
The Queensland Government estimates that approximately 10,000 first home buyers per year will benefit from these changes, which apply to eligible transactions entered into from 9 June 2024.
Importantly, the abovementioned measures are accompanied by a temporary and retroactive doubling of the First Home Owner Grant from $15,000 to $30,000, applicable to eligible transactions entered into between 20 November 2023 and 30 June 2025 (inclusive).
2. Land Tax Surcharge – Foreign Companies, Trustees of Foreign Trusts, and Absentees
Land tax is assessed annually based on the taxable value of land. Different general rates of land tax apply depending on whether the owner is an individual other than an absentee, company, trustee or absentee.
Previously, a 2% surcharge rate applied to absentees (absentee surcharge) and foreign companies and trustees of foreign trusts (foreign surcharge), in addition to the applicable general rates of land tax. From 1 July 2024, both the absentee surcharge and foreign surcharge will increase to 3%. While this rate is lower than the 4% surcharge rate that exists in New South Wales and Victoria, Queensland’s land tax surcharge applies to all land held by a foreign person (e.g., including commercial and industrial land), and not just residential land, as is the case in most states.
Taxpayers affected by these changes should explore whether they qualify for ex-gratia relief from the land tax surcharge, which may be afforded where it is determined that the commercial activities of an Australian-foreign based entity make a significant contribution to the Queensland community and economy. The Commissioner of State Revenue has issued a Public Ruling that sets out the conditions precedent to, and the factors that may be considered, in determining whether such ex-gratia relief should be afforded2.
Additional Foreign Acquirer Duty (AFAD)
AFAD is payable on relevant transactions subject to transfer duty, landholder duty or corporate trustee duty when a foreign person acquires (directly or indirectly) certain residential land in Queensland. As its name suggests, AFAD is a duty additional to the prima facie transfer duty, landholder duty or corporate trustee duty applicable to relevant transactions and operates in the same manner as duty surcharges applied to foreign persons in other Australian jurisdictions.
Currently, AFAD is imposed at a rate of 7% on the dutiable value of relevant transactions to the extent of the foreign acquirer’s interest, where the dutiable property relates to residential land in Queensland. Effective from 1 July 2024, that rate will increase to 8%.
Provided below is a summary of the transfer duty and land tax surcharges applicable to foreign persons on or after 1 July 2024 in other Australian jurisdictions. As can be seen, the increase to Queensland’s AFAD rate brings Queensland into alignment with the rates in New South Wales, Victoria, and Tasmania.
3. Payroll Tax
Payroll tax is levied on taxable wages paid by employers (or groups of employers) once the payroll tax exemption threshold is exceeded. The standard rates of payroll tax are:
- 4.75% for employers with annual Australian taxable wages of $6.5 million or less; and
- 4.95% for employers with annual Australian taxable wages exceeding $6.5 million.
Eligible regional employers currently receive a 1% rate discount. This applies to employers whose principal place of employment is in regional Queensland and who pay at least 85% of taxable wages to regional employees.
From 1 July 2024, the eligibility requirements for this discount will be amended. Specifically, only employers who pay annual taxable wages of $350 million or less qualify, excluding larger businesses who are considered to greater financial capacity to contribute to state revenues. It has been widely reported, this measure is expected to only affect one payroll tax group.
It is estimated this measure will result in additional taxation revenue of approximately $20 million over four years.
Further, the existing 50% payroll tax rebate for exempt wages paid to apprentices and trainees will be extended for a further 12 months for such exempt wages paid during the financial year ending 30 June 2025.
4. Motor vehicle registration fee reduction
From 1 July 2024, the indexation of the registration fee and traffic improvement fee components of motor vehicle registration fees will be frozen. Those components will, additionally, be reduced by 20% for a duration of 12 months.
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.
[1] The first home vacant land concession was not available where the dutiable value of the land was $400,000 or more.
