The abolition of stamp duty for commercial and industrial properties will be a cornerstone of the new Victorian 2023-2024 state budget, while millions of dollars in COVID-era business support funding hangs in the balance.
Victorian Treasurer Tim Pallas will reveal the new state budget Tuesday afternoon, but has already confirmed the end of lump-sum stamp duty payments on non-residential property is integral to the state’s ‘economic growth package’.
From July 1, 2024, the state government will start to replace stamp duty on commercial and industrial property with an annual land tax, set at 1% of the property’s unimproved value.
That tax will be payable ten years after the transaction takes place.
Purchasers of commercial or industrial property past July 1 next year will be free to choose between paying stamp duty as an upfront sum, or paying off the stamp duty amount in instalments, plus interest, over ten years.
Existing commercial or industrial property owners will not be affected by the changes.
The state government says the reform is set to contribute $50 billion to the Victorian economy in the long-term, while easing cash flow constraints for businesses establishing a new location.
“Business and industry have told us they want this reform and we’ve listened,” Pallas said in a statement.
“These landmark changes will enable businesses to be more dynamic and agile, and to grow and employ more workers.
“We’re removing barriers to larger investments, accelerating business growth and helping our economy grow even stronger.”
The reform will help “accelerate building upgrades, stimulate investment in commercial property and free up more capital,” Victorian Chamber of Commerce and Industry CEO Paul Guerra added.
Yet to be seen is whether the new budget will continue a raft of business support measures set to end on or near June 30 this year.
Victoria’s Parliamentary Budget Office has tallied $17.2 billion in government programs which could lose funding in the new financial year without intervention in the upcoming budget.
It is either difficult or “impossible” to preemptively determine which measures with funding through to the 2022-2023 financial year will face a funding extension, the office said.
However, the business-leaning Department of Jobs, Precincts and Regions (DJPR) is a clear standout, with the portfolio counting 67 “potentially lapsing” initiatives, more than any other government department.
“In part this reflects COVID-19 initiatives to support businesses and to address short-term health system needs,” the office said, suggesting COVID-era support measures may be wound back in the new economic forecast.
The Victorian government has contributed more than $13 billion in COVID-19 assistance to small businesses since the onset of the pandemic.
The Melbourne central business district economic package, announced in 2021-2022 and contributing $107.4 million through to the end of the financial year, may not be funded further in 2023-2024, the report found.
A $46.1 million investment in small business energy efficiency measures, introduced in the 2020-2021 state budget and covering the Solar for Business Program and the Small Business Energy Saver Program, is also listed as “potentially lapsing”.
So too is the ‘Driving down gas bills for businesses and households’ policy, introduced in the last state budget, which included one year of funding.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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