News and Updates - Bayview Conveyancing

News and Updates

News

Commercial and Industrial property tax reform

The CIPT reform is detailed in the Commercial and Industrial Property Tax Reform Act 2024 (the Act) and includes amendments to several Acts including the Duties Act 2000 (the Duties Act) and the Taxation Administration Act 1997. The CIPT reform will be effective from 1 July 2024.

Transitioning into the CIPT reform

From 1 July 2024, commercial and industrial properties will transition into the CIPT reform if there is an eligible dutiable transaction or relevant acquisition, defined in the Act as an entry transaction. 
Commercial and industrial properties can also enter the CIPT reform if the property is part of certain types of subdivisions or consolidations of titles.

How does the CIPT reform work?

Duty will still apply to entry transactions.  A duty concession can apply to the entry transaction, such as the 50% concession for a transfer of eligible commercial and industrial property in regional Victoria. Not every dutiable transaction or relevant acquisition is an entry transaction.   With some exceptions for complex transactions and for when an entry transaction concerns an interest in property of less than 100%, any subsequent transactions involving property that previously entered the reform will be exempt from duty if the property continues to be used for commercial or industrial purposes.

CIPT is not payable immediately following the entry transaction. Ten years after the entry transaction, CIPT will begin to apply to the property at a flat rate of 1% of the property’s site (unimproved) value each year provided the property continues to have a qualifying use.  A reduced rate of .5% applies to build to rent land. 
CIPT is different to land tax.  A landowner may be liable to pay annual CIPT and annual land tax. However, land that is exempt land for land tax purposes will generally also be exempt for CIPT. To find out further information regarding Commercial and Industrial property tax reform visit: SRO - Commercial and industrial property tax

First Home Owner

A first home owner may be eligible for a stamp duty reduction/exemption and/or a grant of $10,000.00.  The grant is available to those buying or building a new home depending on eligibility. See  https://www.sro.vic.gov.au/first-home-owner#fhog for current stamp duty and eligibility criteria.

Land Tax

Land tax is an annual tax based on the total taxable value of all the land you own in Victoria, excluding exempt land such as your home (principal place of residence). Land tax is calculated using the site values (determined by the Valuer-General Victoria) of all taxable land you owned as at midnight on 31 December of the year preceding the year of assessment.  You may have to pay land tax if you own, either individually or jointly with others:investment properties, including residential rental propertiescommercial properties such as retail shops, office premises and factoriesholiday homesvacant land.

Land tax assessments are generally issued between January and June each year and due to recent changes in 2024, land tax is now payable on any of the above properties with a site/land value $50,000.00 and above  - previously properties with a site/land value $300,000.00 and below were exempt from land tax on a single holding basis. The changes to  land tax will mean that land tax will be payable on a lot more property throughout Victoria. The properties exempt from land tax include but is not limited to your principal place of residence, primary production land, charities and rooming houses. To find out further information regarding land tax visit https://www.sro.vic.gov.au/land-tax

Windfall Gains Tax

From 1 July 2023, windfall gains tax applies to all land rezoned by the same planning scheme amendment resulting in a value uplift to the land of more than $100,000. In determining the value uplift, all land owned by the person or group and subject to that rezoning is taken into account. What is rezoning? A zone means a zone referred to in Clauses 32 to 37 of the Victoria Planning Provisions (VPP). A rezoning is an amendment of a planning scheme that causes land to be in a different zone from the zone that it was in immediately before the amendment.  Accordingly, for the purpose of windfall gains tax, changes between schedules within the same zone are not a rezoning (i.e. not a windfall gains tax event). 

For example, a change from Neighbourhood Residential Zone Schedule 1 to Residential Growth Zone Schedule 2 is captured, while a change from Neighbourhood Residential Zone Schedule 1 toNeighbourhood Residential Zone Schedule 2 is not captured.  The taxable value uplift is the difference in the capital improved value (CIV) of the land before and after the rezoning takes effect. The Valuer-General Victoria is responsible for determining the value of the land before and after a rezoning. The windfall gains tax provisions allow the Government to prescribe deductions that can reduce the taxable value uplift, however, at this stage, the Government has decided not to prescribe any allowable deductions.  To find out further information regarding windfall tax visit https://www.sro.vic.gov.au/windfall-gains-tax

Please feel free to contact our office

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Address: 135 Ballarto Road Carrum Downs Vic 3201
Email: jo@thebayviewgroup.com.au   |   Phone: 0412401405