Victorian commercial stamp duty reforms introduced to Parliament

The Victorian government officially introduced the Commercial and Industrial Property Tax Reform Bill 2024 to Parliament yesterday (20 March), as part of a move to free up costs for Victorian businesses.

As announced last year, the bill replaces stamp duty for commercial property with an annual property tax.

The Victorian government outlined that the change means that, from 1 July 2024, when a property is sold, stamp duty will be payable one final time on that property.

Then, after 10 years, the commercial and industrial property tax will apply at a rate of 1 per cent of the property’s unimproved land value.

Existing stamp duty concessions for commercial and industrial properties, including the regional concession, will all continue to be available for the final stamp duty payment – and existing land tax exemptions will also apply to the commercial and industrial property tax.

The Victorian government revealed the terms of the stamp duty exemption in December 2023, in which it confirmed that eligible buyers could access a transition loan to fund their final stamp duty payment.

The transition loan will be funded by the Treasury Corporation of Victoria. The government said the loan could help “[free] up capital for businesses”, allowing them to hire more employees or expand their businesses.

The government expects the stamp duty reformation could support new businesses to set up shop, allow businesses to invest in new land, and move to new locations.

It estimates it could boost the Victorian economy by up to $50 billion over the next 40 years (in cumulative net present value terms).

The Allan government clarified that those who own residential, community services, sport, primary production, cultural, or heritage properties would not be affected by the reforms.

Education support regarding the stamp duty reforms will be provided by the government before 1 July to help “industry and taxpayers navigate the transition to the new scheme”.

Tim Pallas, the Victorian Treasurer, said: “While others talk about productivity reform, we’re getting on with abolishing one of the least efficient taxes in the Federation to back Victorian businesses.

“We’ve worked closely with industry to deliver these changes, supporting Victorian businesses to grow and expand faster without the burden of stamp duty.”

The chief executive of the Victorian Chamber of Commerce and Industry, Paul Guerra, commented: “This bold move to stimulate commercial property investment signals the Victorian Government’s willingness to further the conversation about tax reforms in a way that can benefit business growth in Victoria.”

[Related: Victoria government dumps commercial stamp duty]