On 19 September 2023, the NSW Treasurer, the Hon. Daniel Mookhey MLC, handed down the 2023-2024 State Budget. The Treasury and Revenue Legislation Amendment Bill 2023 will, once passed, implement the measures announced in the Budget which are to commence on 1 February 2024.
The budgetary measures amend the following legislation:
Whilst the Payroll Tax Act 2007 is to be amended also, these are merely corrections of errors and do not implement any of the current budgetary measures.
Separate to this amending legislation, the Budget also provides for an increase in coal royalty rates by 2.6%, effective from 1 July 2024:
- For open cut coal – an increase from 8.2% to 10.8%
- For underground coal – from 7.2% to 9.8%, and
- For deep underground coal – from 6.2% to 8.8%.
Duties
Corporate Reconstructions and Consolidations Concession
The exemption from duty for eligible corporate reconstruction transactions and corporate consolidation transactions will be replaced with a concession of 10% of the of duty that would otherwise be payable.
The concession will apply to transactions that occur on or after 1 February 2024. The transitional provisions provide an exception for transactions that arise from an agreement or arrangement entered before the amending legislation was introduced to Parliament and for which an exemption application is lodged on or before 1 April 2024 and is approved. In these circumstances, the full exemption will continue to be available.
A new significant interest acquisition threshold for private unit trusts
Landholder duty is charged on acquisitions of a significant interest (being 50% or more) in private companies and unit trusts that directly or indirectly hold NSW land with an unencumbered value of $2 million or more.
From commencement of the new provisions, amended thresholds will apply for holdings in private unit trusts that are landholders. A 20% significant acquisition threshold will apply to most private unit trusts, while the 50% threshold will be retained for acquisitions in wholesale unit trusts or imminent wholesale unit trusts that are registered with Revenue NSW. The 50% acquisition threshold for private companies and the 90% threshold for public landholders remain unchanged.
The threshold for the tracing of property through ‘linked entities’ of a landholder will also be amended from 50% to 20%. The changes to the landholder duty provisions will apply to acquisitions that are completed on or after 1 February 2024 unless they arose from an agreement or arrangement entered before the amending legislation was introduced to Parliament.
Increase in fixed and nominal duty amounts
Fixed or nominal duty is currently charged in respect of various transactions throughout the Duties Act .These charges have been unchanged since 1 January 2009. From 1 February 2024, duty of:
- $10 is increased to $20;
- $50 is increased to $100 (except where relating to Managed Investment Schemes, which is increased to $500); and
- $500 is increased to $750.
End to the duty exemption for certain zero and low emission vehicles
The exemption from motor vehicle registration duty ceases to be available to zero and low emission vehicles from 1 January 2024. The transitional provisions allow battery electric vehicles and hydrogen fuel cell electric vehicles purchased (or for which a deposit was paid) before 1 January 2024 but that had not yet been registered by that date to continue to access the exemption.
Electric Vehicles (Revenue Arrangements)
Road user charge payable
A road user charge will apply to certain zero or low emissions vehicles from 1 January 2024.
Land Tax Management
Minimum ownership for the principal place of residence land tax exemption
Land may currently be exempt from land tax where only one of multiple owners occupies the property as a principal place of residence even in cases where they own only a tiny proportion of the property. Following the amendments, the exemption will only be available to a person occupying the property as their principal place of residence who owns an interest of at least 25% in the property.
The transitional provision provides that those who already claim the principal place of residence exemption from land tax but own less than a 25% interest in the land may continue to claim the exemption for the 2024 and 2025 land tax years. The minimum 25% ownership requirement will then apply to those owners from the 2026 land tax year.
Taxation Administration
Clarify the grounds for remission of interest
The interest rate applied to tax defaults is the sum of two amounts– a market rate component (the bank accepted bill rate) and a premium component (set at 8%). This amendment provides that interest (including the premium component) may only be remitted in accordance with guidelines made by the Chief Commissioner of State Revenue.
