Currently, where land in an urban zone is owned by a trust, the land must be used solely or primarily for a business of primary production, and the principal business of the trust must be primary production.
The result is that superannuation funds are not technically eligible for the exemption because their sole purpose must be to provide retirement benefits for their members. We understand the proposed change aims to overcome this technicality, so that, going forward, a farmer conducting a primary production business through a superannuation fund will be eligible for a land tax exemption for urban land.
The revenue impact of the extended exemption will be relatively minimal, with an anticipated $3m in revenue forgone in 2016-17.
We see this as a positive step from the state government, although there is still further scope for improvement – such as by extending the primary production land exemption for urban land to land owned by any entity as long as it is used for the business of primary production.
Brown coal royalty rate to rise
The Andrews Government has announced that it will triple the brown coal royalty rate from 7.6c to 22.8c per gigajoule of energy produced.
This brings Victoria’s brown coal royalty rate into line with the New South Wales and Queensland regimes. The royalty is levied on production from Victoria’s four brown coal mines.
The government anticipates that it will reap an additional $252m in revenue over the next four years. The measure is designed to support the transition to cleaner energy sources and ensure that Victoria receives fair value for its endowment of natural resources.