June 11, 2019
The Victorian Government has introduced and passed the State Taxation Acts Amendment Bill 2019. Many of the amendments introduced by the Bill were included in the Budget Papers - and related to increases in Foreign Investor charges and the Vacant Property Tax. Unfortunately there was another property tax change which seems not to have been described in the budget papers but was in the Bill and it is expected to have a major financial impact on development agreements and similar transactions. In particular it will impact situations where land is developed and/or project managed by a second party (i.e. not the land owner) for subsequent sale to home owners.
In simple terms one of the outcomes of the legislation is that the practice of using development agreements will be further regulated and exposed to liability for stamp duty.
HIA asked all parties in the Upper House of the Victorian Parliament to remove the clauses that relate to the additional duty on developer agreements and similar transactions from the Bill to as further clarity is required. The definitions in the Bill are very broad and may inadvertently capture a wide range of people entering into transactions and arrangements with landholders. It is unclear how many projects may be impacted in the future.
These concerns were acknowledged by the Opposition and some crossbenchers and the Parliamentary debate raised serious questions about the Government’s approach to this legislation to expand the tax base with no opportunity for industry consultation.
The changes received royal assent on the 18th June and commenced on the 19th June 2019.
Read the following member alerts for further information and how this change may impact on your business:
In addition, the State Revenue Office has also just published guidelines on implementing the new requirements: