Australia: Tax measures in 2022-2023 budget (New South Wales)

Property tax and payroll tax measures are proposed in the New South Wales budget for 2022-2023

Property tax and payroll tax measures are proposed in the New South Wales budget

The New South Wales budget for 2022-2023 proposes property tax and payroll tax measures.

Property tax

The New South Wales government has taken steps towards replacing the land transfer duty with an annual property tax. Eligible first home buyers would have the option of paying an annual property tax, instead of paying the up-front transfer duty when purchasing a home. The property tax option is available for properties with a value up to $1.5 million.* The property tax is based on the unimproved value of the property. This contrasts with stamp duty, which is payable on the higher of the consideration paid for and the market value of the improved property.

The property tax rates would initially be:

  • For owner-occupiers—$400 plus 0.3% of the unimproved land value
  • For residential investment properties—$1,500 plus 1.1% of the unimproved land value

The New South Wales government is aiming for the property tax legislation to be enacted in the second half of this calendar year, with eligible first home buyers being able to opt in from 16 January 2023. For contracts exchanged between enactment of the legislation and 15 January 2023, eligible first home buyers would be able to apply to opt in and receive a refund of transfer duty paid from 16 January 2023.

In addition, the surcharge land tax appliable to residential land owned by foreign persons would double to 4% from the 2023 land tax year. The early payment discount of 1.5% for taxpayers who pay their land tax in full within 30 days of the assessment would be reduced to 0.5% from 1 January 2023.

Payroll tax

The payroll tax rate would revert to 5.45% from 1 July 2022. The payroll tax waivers and discounts that were available to small and medium businesses, in response to the coronavirus (COVID-19) pandemic, would also cease.

Compliance activity in respect of payroll tax is expected to increase in 2022-23 following the end of COVID-relief measures and additional investment in compliance resources.

Read a June 2022 report [PDF 418 KB] prepared by the KPMG member firm in Australia

*$=Australian dollar

 

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