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Inflation and recovery from the COVID-19 pandemic have created challenges for the economy in Tasmania. Net debt levels are projected to rise significantly, reaching $8.5b by 2027-28 – up from $3.5b in the current year.
Revenue is expected to grow to 8.9b for 2024-25, with Commonwealth contributions that include GST, constituting 65 per cent of Tasmania’s total revenue. The government also recorded an operating deficit of $1.5b.
There were various tax-related revenue measures included in this year’s budget, many of which target housing affordability. However, these were announced by the Liberal Government during the March 2024 State Election ahead of its re-election and subsequently implemented by legislation passed in June and August, leaving few surprises from a revenue perspective.
The Tasmanian Government has implemented a 100 per cent duty exemption for first-home buyers of existing homes valued at $750,000 or less, effective from 18 February 2024 to 30 June 2026 and providing relief of up to $28,935. This replaces a 50 per cent duty concession previously available for existing homes valued at $600,000 or less.
The government has also implemented a 50 per cent duty concession for eligible buyers of off-the-plan apartments and units valued at $750,000 or less. The concession is effective from 1 July 2024 to 30 June 2026.
These changes are intended to provide cost-of-living relief and help Tasmanians break into the property market.
The Tasmanian Government has increased the land tax tax-free threshold by $25,000, from $99,999 to $124,999, effective from 1 July 2024.
Further, to boost rental supply, the government has extended existing land tax exemptions available for newly constructed homes and former short-stary accommodation that are made available for long-term rental. These exemptions will be available for a further two years up to 30 June 2026.
In the previous budget, the Tasmanian Government affirmed its commitment to introducing a road user charge for zero and low emission vehicles, with legislation to be introduced to Parliament in 2024 subject to the outcome of the High Court challenge to Victoria’s zero and low emission vehicle distance-based charge. However, the budget now provides that its work on the road user charge has been paused pending the outcome of the High Court’s decision.
The government has extended several other existing measures. These include:
The budget has referred to the Independent Review of Tasmania’s State Finances conducted by Saul Eslake and issued on 19 August 2024.
The Review has found that Tasmania’s financial position has deteriorated significantly, and corrective action is required. Among other things, the Review recommends that the Tasmanian Government consider:
In response to the Review, the Tasmanian Government has re-emphasised its commitment to not introducing new or increased taxes and states that it will consider the recommendation carefully in this context. Grant Thornton will closely monitor any developments that may arise because of the Review.
If you wish to discuss the Tasmanian State Budget announcements, please reach out to a Grant Thornton Partner today.
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