The state government has finalised a reform that will progressively abolish stamp duty on commercial and industrial properties, including those in Wyndham.
According to the government abolishing the upfront cost of stamp duty and replacing it with a more efficient Commercial and Industrial Property Tax will make it easier for businesses to set up, invest in new land and buildings and move to new locations.
It is estimated the reform will benefit the Victorian economy by up to $50 billion in cumulative net present value terms. Commercial and industrial properties contracted from July 1, 2024 will transition to the new system.
For these properties stamp duty will be paid one last time, with the Commercial and Industrial Property Tax to be payable 10 years after the last stamp duty payment.
When these properties are next sold, stamp duty will not apply – as long as the property continues to be used for commercial and industrial purposes, and even if the property is sold prior to the Commercial and Industrial Property Tax becoming payable.
The Commercial and Industrial Property Tax will be set at a single flat rate of one per cent of a property’s unimproved land value – there are no complicated graduated rates – and exemptions that apply to land tax will also apply. Administration will also be similar to arrangements for land tax, to streamline compliance.
Eligible purchasers will have the option of accessing a government-facilitated transition loan to fund their last stamp duty payment.
The loan will be provided by the Treasury Corporation of Victoria on commercial terms with a fixed interest rate. Annual repayments over 10 years will be set upfront. Further details on the transition loan, including eligibility requirements and terms and conditions, will be advised before July.
These reforms will not apply to properties whose primary purpose is residential, primary production, community services, sport, heritage or cultural. Existing stamp duty concessions for commercial and industrial properties, including the regional concession, will continue to be available.
The removal of stamp duty, which has long been seen as a barrier to growth, is supported by industry groups and independent think tanks including the Victorian Chamber of Commerce and Industry and the Grattan Institute.
Treasurer Tim Pallas said stamp duty is a barrier for business wanting to invest and grow.
“That’s why we are making this landmark change. We’ve worked with businesses to get the design right and look forward to the transition beginning,” he said.
