Victorian Treasurer Tim Pallas announced a number of further tax changes in the state Budget handed down on 20 May 2021 that will impact a wide range of Victorian businesses.
On the positive side of the equation, we welcome the temporary stamp duty concessions that will apply to purchases of new residential property in the City of Melbourne local government area from tomorrow. They will assist developers to clear unsold stock that has not been moving due to the impacts of a softening apartment market as well as the COVID-19 pandemic. They will also help restore some confidence in that sector of the market and support a significant number of jobs as developers invest in new projects. We are also very pleased to see that the Government has listened to our pre-Budget submission requesting further relief for developers from the Vacant Residential Land Tax in circumstances where they are doing everything within their power to sell their stock but are simply unable to do so.
It is, however, unfortunate that the Government has decided to offer these concessions to one segment of the property market while at the same time imposing increased taxes and a new Windfall Gains Tax on other sectors. The increased and new taxes will impact commercial landlords, developers and home buyers alike. At this critical time in our State’s recovery from the global pandemic, we believe that the Government should be doing everything possible to support the 1 in 4 Victorian workers employed within the property sector and should be focussed on creating opportunities for businesses within that industry to employ further staff for their projects. The new 50% Windfall Gains Tax, in particular, is likely to put a handbrake on some large scale development projects in regional Victoria and put at risk many jobs that would have supported those projects.
The Government’s decision to bring forward the increase in the payroll tax threshold to $700,000 and the decrease in the payroll tax rate that applies to regional employers, to 1 July this year is welcome news. The new Mental Health & Wellbeing Levy that will be imposed on businesses with payrolls greater than $10 million is more challenging. It will impact medium sized businesses at a time when they are just beginning to recover from the impacts of last year’s lockdowns and is likely to impose further pain on some labour intensive businesses in the retail and hospitality sectors that have already suffered greatly. Whist we absolutely support additional funding for mental health services, we believe that the new levy should kick in at a much higher level, for businesses with annual Australian wages of at least $50 million.