Australia - Victorian 2019 Budget Changes Now Law.
Legal News & Analysis - Asia Pacific - Australia - Tax
29 June, 2019
The State Taxation Acts Amendment Act 2019 (Vic) (Act) is now law following assent on 18 June 2019.
The Act makes major changes to stamp duties in Victoria. Details are set out in our earlier alert on the budget changes.
- Development agreements are likely to become subject to ad valorem duty under a new dutiable category of “economic entitlements” over land.
- Increases in foreign resident surcharges (stamp duty and land tax)
- Corporate reconstructions (including lease transfers within corporate groups) no longer fully eligible for corporate reconstruction exemptions.
The extent of what is an “economic entitlement” remains uncertain and technically captures a wide range of rights to participate in income, rents, sale proceeds or receive amounts referable to these things. Taken literally, this means that a range of service fees calculated on the basis of these amounts are brought to duty. The State Government has indicated in Parliament that despite the width of the provisions, the new laws will not “impose duty on real estate agents, project managers or investment managers that charge a service fee or receive a commission. Ordinary fees for service such as real estate agent fees — even when calculated based on a commission basis — are simply not economically equivalent to ownership interests.”
Formal guidance from the State Revenue Office is awaited that sets out how the new rules will be administered and the limits to be placed on the reach of what is an “economic entitlement.”
For further information, please contact:
Simone Bridges, Baker & McKenzie