The Queensland State Budget was delivered to parliament today, and as all the news headlines will state, there are winners and losers.
From a tax perspective, there are certainly some important impacts to be noted by both businesses and individuals, and some of them will be felt sooner rather than later, with the Government aiming to pass these bills into legislation by the end of this week. We expect the land tax changes to apply as of midnight 30 June 2018.
After reading through both the budget and the bills, our assessment of the situation is as follows:
Consumption Betting Tax
Following in the footsteps of South Australia, Victoria and the ACT, the Queensland Government has introduced a 15% point-of-consumption betting tax to take effect from 1 October 2018. The new measure will replace the previous place of supply wagering tax that applied to sole retail wagering licensees in Queensland. The 15% rate is identical to that introduced by other states but, by contrast, Queensland will be the only state to introduce a threshold concession for smaller betting operators. No tax will be paid on any betting operator’s revenue up to and including $300,000 in a financial year. The Government has committed to ongoing discussions with Racing Queensland and key stakeholders to appropriately prepare for the rollout, with initial projections suggesting that the tax will generate revenue of approximately $71 million in the 2018-19 financial year.
The change will be introduced through the Betting Tax Bill 2018 (Qld), which is currently before Parliament.
Payroll Tax Apprentice and Trainee Rebate
After an original introduction in the 2016-107 financial year, the payroll tax rebate on exempt apprentice and trainee wages has been extended to apply until 30 June 2019. This end date comes a further 12 months than originally announced, with the Queensland Government outlining its commitment to providing additional support to businesses employing apprentices and trainees to 30 June 2019. The extension comes at an expected cost of $26 million, but average annual payroll tax growth is anticipated at 5.1% on the previous 2017-18 financial year. Businesses who employ apprentices or trainees under the Further Education and Training Act 2014 (Qld) should consider how the rebate and exemptions may apply to them.
Land tax increase to rate on holdings above $10m by 0.5%
Landowners with aggregated landholdings with a taxable value of more than $10 million will now be subject to an 0.5% increased rate of land tax. Prior to the change, the highest taxable value bracket imposes land tax at 1.75% (or 2% for trusts, companies or absentee landholders) for every dollar over $5,000,000. Individuals with properties worth more than $10 million will now incur an additional rate of 2.25% (or 2.5% for trusts, companies or absentee landholders) for every dollar of taxable value over $10,000,000. While the 0.5% increase has been touted as modest, the impact of the change will depend on the value of an entity’s landholdings. By way of example, entities with landholdings valued at $11 million will see a $5,000 increase on their yearly land tax bills. Comparatively, the land tax on aggregated landholdings of $20 million would increase by $50,000 per year.
This is expected to bring in $71 million in revenue in its first year, with a projected 11% increase in 2018-19 land tax revenue largely due to this measure.
AFAD increase to 7%
In another alignment with other Australian states, the Queensland Government has announced an increased rate for additional foreign acquirer duty. The rise from 3% to 7% is forecast to result in increased revenue of $33 million per annum. The new rate will apply from 1 July 2018 and will increase the additional duty payable on transfer duty, landholder duty and corporate trustee duty for direct or indirect acquisitions of certain Queensland residential land by foreign persons.
Premium Motor Vehicle Duty
From 1 July 2018, owners of vehicles worth more than $100,000 will be subject to a 2% increase on their vehicle registration duty payable. The premium motor vehicle duty change will take effect from 1 July 2018 and will apply to vehicles that are not special or heavy vehicles. The change is expected to generate $24 million in revenue per annum, with vehicle registration revenue expected to grow by 9.1% in 2018-19.
Primary Production Definition
The Revenue Legislation Amendment Bill 2018 (Qld), as introduced to implement the budget, includes a provision to move and expand the definition of primary production land to the Land Tax Regulation 2010 (Qld). The definition has been amended to more closely follow the definition of primary production to support the Office of State Revenue’s assessing practices and to provide administrative certainty. We note the wording is consistent with the Commissioner’s existing Public Rulings on primary production and resembles the definition of primary production activities in other jurisdictions, such as New South Wales.
The changes are not intended to alter the OSR’s current assessing practice, and it is expected that taxpayers who currently fall within the exemption will continue to be exempt.
Land Tax Portal
As part of the OSR’s Transformation Program to enable improved revenue management services, the OSR is introducing an online land tax portal. This will enable the Commissioner to provide documents, such as land tax assessment notices, to taxpayers electronically. Taxpayers can elect to receive text messages or emails notifying them about documents uploaded to this portal.
Use of the portal is voluntary and can potentially improve communications between the OSR and taxpayers. Taxpayers who do not give consent to use the portal will receive their documents under current methods.
In summary, the government has announced a big spending budget on infrastructure and jobs. Where this money will come from, amongst other things, is the introduction of the four “modest revenue measures” (as stated in the government papers), which are also being referred to as “luxury taxes”.
Whilst the Government may regard the changes as modest, for significant land holders in particular, this introduces an extra cost that will certainly impact on their bottom line.