Australia: The NSW Government Budget 2007/2008

The Budget makes significant changes to the timing of the abolition of Mortgage Duty and provides other reductions in duty.

The land tax rate will be cut to 1.6% from 1.7% for the 2008 land tax year, beginning 1 January 2008.

Mortgage duty will be abolished in advance of the schedule confirmed in last year’s budget. Under the new schedule, mortgage duty will be abolished in three stages:

• from 1 September 2007, for individuals taking out mortgages of owner-occupied residences

• from 1 July 2008, for individuals taking out mortgages of non-owner-occupied residences

• from 1 July 2009, total abolition of mortgage duty.

Stamp duty on the hire of goods will be abolished from 1 July 2007 and on leases from 1 January 2008.

Neither a general anti avoidance provision nor any targeted anti-avoidance provisions were introduced to the Duties Act.

In accordance with the joint NSW/Victoria announcements on 26 February 2007, NSW and Victoria will adopt measures to harmonisation payroll tax laws in the two States. The Budget Papers state that from 1 July 2007, the following employer payments will be exempt from payroll tax:

• payments for maternity and adoption leave

• employer contributions to portable long service leave, redundancy or severance schemes, provided they are not taxable for fringe benefit tax purpose

• non-monetary superannuation contributions.

However, from 1 July 2007, the following exemption will be removed:

• the specific exemption for wages paid to financial planners under relevant contract provisions

• the exemption for payments under a contract exceeding $800,000

• the exemption for contractors providing services to the public generally will be amended to require those services to the public to be provided in the same financial year

• the exemption provided to employment agents that on-hire staff to a client with wages below the $600,000 tax-free threshold will be removed

• the general exemption for wages of apprentices/trainees will be removed from 1 July 2008.

In accordance with the Government's election promise, the stamp duty concessions for first home buyers will be extended to acquisitions under shared equity schemes.

For contracts exchanged on or after 1 May 2007, first home buyers purchasing a home in conjunction with equity partners who have previously owned residential property in Australia are eligible for proportional transfer duty concessions and full mortgage duty concessions under First Home Plus One. First home owners are required to have at least a 50% share in the property.

The transfer duty concession will be available in proportion to the first home buyer’s equity share in the property. The Budget Papers explain that where a first home buyer and a non-qualifying equity partner purchases a home for less than $500,000, the first home buyer will pay no transfer duty and the non-qualifying equity partner will pay a share of the transfer duty based on their share of the property. However, no concession is only available for homes costing less than $600,000.

A rebate will be provided on the cost of registering one work vehicle for every new apprentice hired by small businesses during 2007-08. The rebate will only apply to small businesses that are not liable to pay payroll tax – i.e. where total taxable wages and interstate wages are less than $600,000.

Transfer duty on non-land business assets will be abolished from 1 July 2012.

The duty on unquoted marketable securities duty is abolished from 1 January 2009.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.