On Thursday 20th May, the Victorian Treasurer Tim Pallas delivered the State Budget for 2021-22. The Budget was described by the state government as Victoria’s road to recovery, this plans to achieved by investing in some transformational changes, especially in the space of mental health support.
During the 2020-21 financial year Victoria recorded a significant deficit of $17.4 billion. This means that the state is forecast to remain in a shortfall until at least 2025. Despite this, the eye-watering number is not as high as originally predicted last year, with a $23.3 billion deficit previously predicated in November 2020.
The decrease in the projected deficit illustrates that Victoria has recovered from the crippling economic effects of the covid-19 pandemic much more efficiently and quicker than anticipated.
Here is a summary of the proposed measures that have been announced.
To help enhance the lives of many people living in Victoria, the state government has announced a new mental health system which has been built from the ground up. The Victorian government is turning to big businesses to help fund this initiative by announcing a new Mental Health & Wellbeing Levy in the form of a payroll tax surcharge starting on the 1st January 2022. This initiate aims to collect over $3 billion over a period of four years. The proposed payroll tax surcharge involves:
- a surcharge of 0.5% on wages by Victorian businesses with national payrolls over $10 million a year.
- an additional surcharge of 0.5% (i.e. a total of 1% surcharge) to those with national payrolls above $100 million.
Commencing on the 1st July 2021, the payroll tax-free threshold will increase from $650,000 to $700,000 and the regional employer rate will reduce from 2.02% to 1.2125% (brought forward from the planned commencement date of 1 July 2022).
Measures announced by the Victorian Government in relation to land tax include;
- an increase in land tax rates for high value landholdings by 0.25% for landholdings above $1.8 million and 0.3% for landholdings exceeding $3 million, from 1 January 2022.
- an increase of the tax-free threshold from $250,000 to $300,000, from 1 January 2022. The rate for land held on trust remains unchanged.
- a new windfall gains tax for high value landholdings that are rezoned, from 1 July 2022.
- the vacant residential land tax exemption for new developments to be extended to apply for up to two years, from 1st January 2022.
- removal of the land tax exemption for private gender-exclusive clubs, from 1st January 2022.
Land Transfer Duty (Stamp Duty)
Some of the measures on land transfer duty (stamp duty) include:
- a new premium duty rate for property transactions with a dutiable value above $2 million for contracts entered into from 1st July 2021, with duty payable to increase by an additional 1% (to 6.5%) of the dutiable value above $2 million. For dutiable value in excess of $960,000 and up to $2 million, the duty rate remains unchanged at 5.5% of the dutiable value.
- a temporary duty concession of up to 100% for purchase of new residential property in the Melbourne local government area with a dutiable value of up to $1 million, for contracts entered into from 21st May 2021 to 30th June 2022.
- a temporary increase in the off-the-plan duty concession threshold to $1 million for all home buyers, from 1st July 2021 to 30th June 2023.
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