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The first budget under Allan’s leadership delivered a $2.2b deficit this financial year, returning to a surplus of $1.5b and a forecasted unemployment rate of 4.5 per cent by 2025-26. Currently, net debt is sitting at $156.2b. By 2027-28, it’s projected to hit $187.8b, with the Treasurer focusing on moving beyond COVID-19 debt and reducing overall debt compared with the state’s economy.
Separately, the airport rail line is set to be delayed another four years with Commonwealth and state governments already committing $5b to the project.
The 2024-25 State Budget delivers some moderate changes to stamp duty, land tax and insurance duty, which are reflected in The State Taxation Amendment Bill 2024 – introduced into the Victorian Legislative Assembly by the Treasurer. While this Bill is not yet publicly available, most of the changes were already announced in last year’s State Budget, with implementation of the changes proposed to take effect from 1 July 2024.
Victorian Government reiterated its commitment to abolishing stamp duty for commercial and industrial properties progressively commencing from 1 July 2024, which was announced as part of last year’s State Budget. The Commercial and Industrial Property Tax Reform Bill 2024 seeking to enact this significant reform has passed the Legislative Assembly and is now being read by the Legislative Council.
The Government is progressing with its proposed abolition of business insurance duty, with the rate of duty – currently 10 per cent – being reduced by 1 percentage point each year from 1 July 2024. Business insurance duty currently applies to public and product liability, professional indemnity, employers’ liability, fire and industrial special risks, and marine and aviation insurance.
From 1 July 2024, the payroll tax-free threshold is proposed to be increased from $700,000 to $900,000, and then to $1m from 1 July 2025. It is estimated around 6,000 small businesses will stop paying payroll tax altogether, and a further 22,000 will pay less payroll tax as a result of this change.
Additionally, from 1 July 2024, the tax-free amount will reduce for each dollar of wages a business pays over $3m, while businesses with wages over $5m will not receive the benefit of the tax-free threshold.
The Victorian Government has announced a standalone land tax exemption for social and emergency housing. Eligible land may qualify for this exemption commencing 1 January 2025. The exemption can also apply to charity owned land where social and emergency housing is under development. This is not a new exemption but clarifies existing arrangements that owners of land used to provide social and emergency housing are not liable to pay land tax.
If you wish to discuss the Victorian Budget announcements, please reach out to a Grant Thornton Partner today.
