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2017 State budget

The New South Wales (NSW) Treasurer, The Hon. Dominic Perrottet MP, announced the following changes to State taxes and grants as part of the 2017 State Budget.

These changes were introduced under the State Revenue and Other Legislation Amendment (Budget Measures) Act 2017.

Duties

First Home Buyers Assistance

From 1 July 2017 the First Home New Home scheme will be replaced by the First Home Buyers Assistance scheme.

First home buyers will not have to pay duty for both new and existing homes for properties up to $650,000. The duty will be reduced for amounts between $650,000 and $800,000. There is no change to the cap for vacant land.

For more information, visit the Frequent questions page.

Shared Equity Scheme

From 1 July 2017, the shared equity scheme applies where a home buyer purchases a property with an approved equity partner. This scheme helps people who may not otherwise be able to afford their home on their own to become a home owner by purchasing with an equity partner.

Approved equity partner means:

Guidelines on the operation of this scheme will be developed.

The shared equity scheme is a scheme where:

  • the home buyer must acquire not less than a 20 per cent share in the ownership of the property
  • the equity partner has the right to a share in any capital gains on sale or refinancing but has no right of occupation
  • the home buyer can purchase more equity in the property from the equity partner at a price determined under the arrangement between the home buyer and the equity partner.

Any subsequent transfers of equity from the equity partner to the home buyer will be exempt from further duty.

If the dutiable value of the property meets the requirements of the First Home Buyers Assistance, the home buyer will be entitled to the exemption or concession.

A home owner may be entitled to the first home owner grant if the total purchase price falls under the cap and all other conditions of the scheme are met.

For more information, visit the Frequent questions page.

New Home Grant Scheme

The New Home Grant scheme, providing a $5,000 New Home Grant will close on 30 June 2017.

For more information, visit the Frequent questions page.

First Home Owner Grant (New Homes) from 1 July 2017

First home owners can access a $10,000 grant for:

  • building a new home under a home building contract where the contract price, when added with the land value, does not exceed $750,000
  • a new home being built by an owner builder where the value of the land and building does not exceed $750,000 or
  • purchasing a new home worth up to $600,000.

Purchases 'off the plan' by investors

From 1 July 2017, all residential purchases by investors will be excluded from the 12 month off the plan transfer duty liability deferral.

Purchasers who wish to obtain the deferral will need to declare an intention to occupy the property as their principal place of residence (PPR).

If a purchaser claims an entitlement to the deferral, but the land is not occupied as the purchaser’s PPR for a continuous period of 6 months, commencing no later than 12 months after completion of the sale or transfer, interest and penalty tax may apply from the liability date.

For more information, visit the Frequent questions page.

Land tax

Principal place of residence

The principal place of residence exemption will be extended to land used and occupied by an owner under a shared equity scheme as defined above. The exemption will apply from the 2018 tax year.

Surcharge purchaser duty

Rate of duty

From 1 July 2017, the surcharge purchaser duty rate will increase from 4 per cent to 8 per cent.

Permanent residents (including New Zealand citizens)

From 20 June 2017, permanent residents, including New Zealand citizens holding a Special Category visa (subclass 444), will be exempt from surcharge purchaser duty on their principal place of residence, if they occupy the home for a continuous period of 200 days within 12 months of purchase.

The exemption will be granted if the person declares that they will complete the 200 day residence requirement.

Australian-based developers

An Australian-based developer may be entitled to a refund of surcharge purchaser duty if they are an Australian corporation. This applies to an eligible developer who acquired land on or after 21 June 2016. The corporation or a related body corporate of the corporation must have constructed a new home on the residential land to which the residential-related property relates after completion of the transfer of the property to the corporation.

An 'Australian corporation' means a corporation that is incorporated under the Corporations Act 2001 (Cth).

The proportion of surcharge purchaser duty refunded will be based on the proportion of dwellings sold (other than to an associated person) within 5 years of the completion of the purchase of the land by the developer. Where separate dwellings are sold progressively over the 5 year period, a developer may be granted partial refunds.

Guidelines will be provided by way of an order made by the Treasurer.

A refund will be payable in respect of the sale of a new home. A dwelling that has been rented or occupied at any time while owned by the developer is not eligible for a refund.

Commercial residential property

Commercial residential property will be exempt from surcharge purchaser duty.

The Chief Commissioner will make a determination identifying classes of commercial residential property.

For more information, visit the Frequent questions page.

Surcharge Land Tax

Rate of tax

From the 2018 tax year, the surcharge land tax rate will increase from 0.75 per cent to 2 per cent.

Permanent residents (including New Zealand citizens)

From the 2018 tax year, permanent residents, including New Zealand citizens holding a Special Category visa (subclass 444), will be exempt from surcharge land tax on their principal place of residence, if they occupy the home for a continuous period of 200 days in the land tax year.

The exemption will be granted if the person declares that they will complete the 200 day residency requirement.

Australian-based developer

An Australian-based developer may be entitled to a refund of surcharge land tax if they are an Australian corporation. The corporation or a related body corporate of the corporation must have constructed a new home on the residential land and after the taxing date, the corporation must have sold the new home to a person other than an associated person of the corporation.

An 'Australian corporation' means a corporation that is incorporated under the Corporations Act 2001 (Cth).

The proportion of surcharge land tax refunded will be based on the proportion of dwellings sold (other than to an associated person) within 5 years of the completion of the purchase of the land by the developer. Where separate dwellings are sold progressively over the 5 year period, a developer may be granted partial refunds.

The exemption is retrospective to an eligible company.

  • In cases where the land was acquired before 21 June 2016, the 5 years commences from 21 June 2016
  • If land was acquired after 21 June 2016, the 5 years commences from time the land was acquired.

Guidelines will be provided by way of an order made by the Treasurer.

A refund will be payable in respect of the sale of a new home. A dwelling that has been rented or occupied at any time while owned by the developer is not eligible for a refund.

Commercial residential property

From 2018 tax year, commercial residential property will be exempt from surcharge land tax.

The Chief Commissioner will make a determination identifying classes of commercial residential property.

For more information, visit the Frequent questions page.

Insurance duty

Lenders Mortgage Insurance (LMI)

From 1 July 2017, an LMI policy will be exempt insurance in NSW meaning an insurer who issues a LMI policy will no longer need to pay duty on this premium where the policy is over property in NSW.

LMI means insurance taken out by lenders to cover loss arising from default by the mortgagor.

For more information, visit the Frequent questions page.

Crop and Livestock Insurance

From 1 January 2018 crop and livestock insurance will not be liable to duty.

For more information, visit the Frequent questions page.

Small business exemption

From 1 January 2018 small businesses are not liable to duty on certain types of insurance.

The exemption will apply to the following types of insurance:

  • Commercial vehicle insurance - for a motor vehicle used primarily for business purposes
  • Commercial aviation insurance - for an aircraft used primarily for business purposes
  • Occupational indemnity insurance – insurance covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover within the meaning of the Medical Indemnity Act 2002 of the Commonwealth)
  • Product and public liability insurance – insurance covering liability for personal injury of property damage occurring in connection with a business or arising out of the products or services of a business.

A small business is an entity within the meaning of section 152-10 (1AA) of the Income Tax Assessment Act 1997 of the Commonwealth for the income year in which the insurance is effected or renewed. At present, you are a small business entity if you are an individual, partnership, company or trust that:

  • is carrying on a business, and
  • has an aggregated turnover of less than $2 million.

For more information, visit the Frequent questions page.

Fire and Emergency Services

The Budget legislation includes the Emergency Services Levy Bill 2017 which will defer the introduction of the Fire and Emergency Services Levy (FESL) to ensure small to medium businesses do not face an unreasonable burden in their contribution to the State's fire and emergency services.

The NSW Government will work with local government, fire and emergency services, the insurance industry and other stakeholders to find a better and fairer path forward.

The Bill continues the current scheme for collection of the Fire and Emergency Services Levy through insurance policies until the NSW Government has completed its review of the policy, and the funding requirements of fire and emergency services agencies will be met in full.

The Emergency Services Levy Insurance Monitor will oversee a smooth continuation of the existing system and ensure insurance companies collect only the amounts necessary to meet fire and emergency services funding requirements.

Last updated: 2 August 2017