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The reform will see commercial and industrial properties pay an annual tax from 1 July 2024 instead of the lump sum figure.
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Victorian government abolishes stamp duty
23 May 2023
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9 minute read
The Victorian government will abolish stamp duty on commercial and industrial properties as part of its 2023–24 budget.
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The Andrews government said the move from a lump-sum stamp duty system to an annual property tax will help businesses expand and create new jobs along with providing a cumulative increase in Victoria’s economy of $50 billion.
Victorian Treasurer Tim Pallas said the measures were widely welcomed by the business community and will see organisations prosper.
“Business and industry have told us they want this reform and we’ve listened,” said Mr Pallas.
“These landmark changes will enable business 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 introduced annual tax would not apply to existing owners but only on commercial and industrial properties sold from 1 July 2024 with the annual property tax to be payable from 10 years after the transaction.
The government said to ensure a smoother transition, the first purchaser of the property after 1 July 2024 will be able to choose to either pay the property’s final stamp duty liability as an upfront sum or transition to an annual payment by opting to pay fixed instalments over 10 years equal to stamp duty and interest with a government-facilitated loan.
However, once a property enters the new system stamp duty will never again be payable on a transaction and the annual property tax will apply.
The government said the annual property tax will be set at a flat one per cent of the property’s unimproved land value.
Victorian Chamber of Commerce and Industry CEO Paul Guerra said the reform was a welcome relief to businesses in the state.
“The Victorian Chamber has been working with the state government on this landmark and generational productivity reform which businesses across Victoria will welcome,” said Mr Guerra.
“This is exactly the type of progressive tax reform that is required to free up stamp duty charges which will accelerate building upgrades, stimulate investment in commercial property and free up more capital.”
The announcement comes after the NSW Labor government revoked the previous administration’s property tax scheme on residential real estate and instead provided greater stamp duty exemptions and concessions on properties up to $1 million.
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