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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.
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.
The exemption for first home buyers will apply to contracts executed on or after 1 July 2017 for properties up to $650,000. For properties valued between $650,000 and $800,000, duty concessions will apply.
There are no changes to the cap for vacant land.
No, the exemption applies to new and existing homes purchased by first home buyers.
The 1 July 2017 date refers to the date the contracts were exchanged.
First home purchase refers to the first home you purchase which you must occupy for a continuous period of 6 months, commencing within 12 months of settlement.
If you settled before 1 July 2017, you are only entitled to the benefits that were available at that time. Please check our website for more information.
As your contract is already executed, you are liable to pay duty. If you rescind and enter into the contract for the same property after 1 July 2017 you will not be eligible for the new benefits.
As your contract is already executed, you are liable to pay duty. If you rescind and enter into the contract for the same property after 1 July 2017 you will not be eligible for the new benefits.
No, the changes to the First Home Buyers Assistance scheme are not retrospective.
No additional forms are anticipated at this stage. However some existing forms will need to be modified and in the case of the new scheme the old form will be replaced with a new one.
If the exercise of the option occurs on or after 1 July 2017, you will be able to claim the new exemption or reduction.
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:
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.
Approved equity partner means:
The home buyer must acquire not less than a 20% share in the ownership of the property. The equity partner has a right to share in any capital gains on sale or refinancing but have no right to occupy the home. The home buyer can purchase more equity from the equity partner with no additional duty.
If the purchase price of the property meets the requirements for the First Home Buyers Assistance Scheme, you will be entitled to the exemption or concession and if the total purchase price meets the cap for first home owner grant and all conditions of the grant are met, you will be entitled to the grant.
The shared equity scheme does not replace the shared equity arrangements. That scheme is still available.
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.
The New Home Grant scheme, providing a $5,000 New Home Grant will close on 30 June 2017.
The New Home Grant providing a $5,000 grant will not be available for contracts entered into after 30 June 2017. That scheme will be closed.
No.
First home owners can access a $10,000 grant for:
Yes. On and from 1 July 2017, the eligibility cap has been decreased from $750,000 to $600,000. This applies to contracts to purchase new homes, entered into on or after 1 July 2017. The cap of $750,000 still remains in case of comprehensive home building contracts to build a new home, or the building of a home by an owner builder.
Yes, if you are building a new home you will receive the $10,000 grant. The cap for building a new home is still $750,000.
Yes, you would be eligible for the grant because your contract was executed before 1 July 2017.
No, the Grant is only available for new homes or the building of a new home, not an existing home.
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.
If you enter into an off the plan purchase agreement on or after 1 July 2017, you would not be eligible for the 12 month duty deferral. You will need to pay duty within 3 months from the date of the contract.
If you are a purchaser and you wish to get the deferral, you must declare your intention to occupy the property for a continuous period of 6 months, commencing within 12 months from the completion of the sale or transfer.
If you don’t meet the residence requirement, duty together with interest and penalty tax may apply from the normal liability date.
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.
From 1 July 2017, the surcharge purchaser duty rate will increase from 4 per cent to 8 per cent.
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.
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 will be exempt from surcharge purchaser duty.
The Chief Commissioner will make a determination identifying classes of commercial residential property.
The surcharge purchaser duty rate will increase for residential property acquired by a foreign person on or after 1 July 2017. The rate will increase from 4 per cent to 8 per cent.
If you are an Australian-based developer you will pay surcharge purchaser duty when you purchase the land. However, you will be entitled to a refund on the sale of a new home to a person who is not associated to the corporation.
An ‘Australian corporation’ means a corporation that is incorporated under the Corporations Act 2001 (Cth).
Once the legislation is enacted, this exemption will be retrospective and will take effect from 21 June 2016.
Yes, commercial residential properties (e.g. purpose built student accommodation) will be exempt from surcharge purchaser duty.
Guidelines will be issued to identify classes of commercial residential property that will be exempt.
If you are a New Zealand citizen who holds a Special Category visa (subclass 444), you will be exempt from surcharge purchaser duty if you reside in the property as your principal place of residence for a continuous period of 200 days commencing within 12 months from the liability date.
If you are a permanent resident, you will be exempt from surcharge purchaser duty if you reside in the property as your principal place of residence for a continuous period of 200 days commencing within 12 months from the liability date.
From the 2018 tax year, the surcharge land tax rate will increase from 0.75 per cent to 2 per cent.
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.
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.
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.
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.
Surcharge land tax rate will increase from 0.75 per cent to 2 per cent for the 2018 tax year. For the 2017 tax year the rate will still be 0.75 per cent.
If you are an Australian based developer you will be exempt from surcharge land tax upon the sale of a new home to a person who is not associated to the corporation. If you have already paid surcharge land tax, a refund may apply.
An ‘Australian corporation’ means a corporation that is incorporated under the Corporations Act 2001 (Cth).
This exemption is retrospective and will take effect from 21 June 2016.
Yes, commercial residential properties will be exempt from surcharge land tax.
Guidelines will be issued to identify classes of commercial residential property that will be exempt.
If you are a New Zealand citizen, who holds a Special Category visa (subclass 444), you will be exempt from surcharge land tax if you reside in the property as your principal place of residence for a continuous period of 200 days after the taxing date and before the end of the relevant tax year.
You will be exempt from surcharge land tax if you reside in the property as your principal place of residence for a continuous period of 200 days after the taxing date and before the end of the relevant tax year.
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.
No. This saving will apply to all borrowers where a Lenders mortgage insurance policy is taken out.
There may be situations where a quote has been provided for a LMI policy prior to 1 July 2017 and this quote includes an amount for NSW duty even though settlement on the purchase of the property will not take place until after 1 July 2017 and the LMI policy for the purchase is exempt from duty. The Government is working with insurers and lenders to ensure that such amounts are returned to borrowers.
There may also be times where the security provided for the loan includes property in another State or Territory. Insurance duty may still be payable in that State or Territory on the LMI policy and this cost may be passed on to the borrower.
For LMI that come into effect on or after 1 July 2017, duty will no longer apply. However, if the settlement of your loan occurred on or after 1 July 2017 and you are unsure whether you are entitled to a refund from you lender, you should contact your lender to discuss your situation.
If you are entitled to a refund from your lender, you should contact your lender to discuss your situation.
It is anticipated that insurers will not pay Revenue NSW any duty on LMI policies effected on or after 1 July 2017. The Duties Act contains provisions that enable Revenue NSW to offset a payment where an amount has been refunded to the insured or the borrower. Revenue NSW is unable to provide a refund to a lender or borrower.
No - the exemption only applies to insurance policies effected on or after 1 July 2017.
Find out more about lenders’ mortgage insurance by reading the Insurance Council of Australia’s LMI Fact Sheet.
From 1 January 2018 crop and livestock insurance will not be liable to duty.
Yes, as the policy is effected prior to 1 January 2018 it will remain liable for duty. It does not matter when the premium is paid.
If a policy is effected or renewed before 1 January 2018 it will remain liable for duty. It does not matter if the premium is paid before or after 1 January 2018 or if the premium is paid in instalments.
If the policy covers crop and/or livestock insurance as well as other risks, then the premium will require apportionment between the different types of risks to determine the duty payable on the part of the premium that relates to the other risks.
Similarly, if the policy applies across multiple States or Territories then the premium will require apportionment in order to calculate any duty payable for each State or Territory.
No. The exemption only applies to insurance policies effected or renewed on or after 1 January 2018.
From 1 January 2018, certain types of general insurance are exempt from duty provided that the insured person is a CGT small business.
For more information visit the Exemption for small business page.
An insurer will require the insured to provide a small business declaration. This is a declaration by the insured, in writing, to the effect that the person is a small business at the time that the contract of insurance is effected or renewed.
In addition to a penalty of up to $11,000 the insured may be required by the insurer to pay to the insurer an amount equal to the duty, together with any interest or penalty tax payable. The insurer may recover this amount as a debt if the amount is not paid.
No. The exemption only applies to insurance policies effected or renewed on or after 1 January 2018.
If the policy covers multiple types of insurance, then the premium will require apportionment between the different types in order to determine the duty payable.
Similarly, if the policy applies across multiple States or Territories then the premium will require apportionment in order to calculate any duty payable for each State or Territory.
If a policy is effected or renewed before 1 January 2018 it will remain liable to duty. It does not matter if the premium is paid before or after 1 January 2018 or if the premium is paid in instalments.
A small business is not liable to duty for certain types of Insurance where the premium is paid on or after 1 January 2018. The policy may include multiple types of insurance which may not always be clear. Duty will continue to apply to other types of insurance and this may be why you will still see duty on your policy after 1 January 2018. Contact your insurer if you require further information.
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.