The Victorian Government introduced new legislation into the Parliament this week to abolish stamp duty on commercial and industrial properties.
The Commercial and Industrial Property Tax Reform Bill 2024 will remove the upfront cost of stamp duty and replace it with a Commercial and Industrial Property Tax – making it easier for businesses to set up, invest in new land and buildings, and move to new locations.
Initially announced in the 2023-24 Victorian Budget, the Government claims the reform will add thousands of jobs and benefit the state’s economy by up to $50 billion in cumulative net present value terms over the next 40 years.
From July 1, 2024, when a property is sold, it will transition into the new system, with stamp duty being payable one final time on that property, and then after 10 years the Commercial and Industrial Property Tax applying at a rate of one per cent of the property’s unimproved land value.
Victoria will remove the upfront cost of stamp duty and replace it with a property tax
To fund the final stamp duty payment, eligible purchases can access a transition loan provided by the Treasury Corporation of Victoria on commercial terms, freeing up capital for businesses so they can expand or employ more workers. The reform will replace upfront cost of stamp duty with a Commercial and Industrial Property Tax
Owners of residential, primary production, community services, sport, heritage or cultural properties will not be affected by the reforms.
Existing stamp duty concessions for commercial and industrial properties, including the regional concession, will all continue to be available for the final stamp duty payment – and existing land tax exemptions will also apply to the Commercial and Industrial Property Tax.Ahead of the July 1, 2024 start date, the Government will provide educational support on the reform, including helping industry and taxpayers navigate the transition to the new scheme.
Treasurer Tim Pallas says the Government has worked closely with industry to deliver the changes, “supporting Victorian businesses to grow and expand faster without the burden of stamp duty”.Victorian Chamber of Commerce and Industry CEO Paul Guerra adds that the “bold move” to stimulate commercial property investment signals the Victorian Government’s willingness to “further the conversation about tax reforms in a way that can benefit business growth in Victoria”.
