Update: duty concessions for purchase of regional commercial, industrial and extractive industries properties

Corporate & Commercial 17 July 2019

On 18 June 2019, the State Taxation Acts Amendment Bill 2019 (Vic) (“Amendment Bill”) was given Royal Assent.  The Amendment Bill made a number of significant changes to Victoria’s state taxes, including new stamp duty concessions.

The Amendment Bill amends the Duties Act 2000 (Vic) (“Duties Act”) to include Division 5A which, from 1 July 2019, provides for duty concessions for regional properties which are used or intended to be used for commercial, industrial or extractive industry purposes.  The duty concession is available to all purchasers or transferees of land, including individuals, corporations or trusts.

The duty concession for eligible transfers for the 2019-20 financial year is ten percent (10%).  The concession will increase by ten percent (10%) each subsequent financial year, until 1 July 2023, when it will be capped at fifty percent (50%).

Contract entered intoDuty concession amount
1 July 2019 to 30 June 202010%
1 July 2020 to 30 June 202120%
1 July 2021 to 30 June 202230%
1 July 2022 to 30 June 202340%
After 1 July 202350%

If the transferee is entitled to receive another duty exemption or concession under the Duties Act, they must elect which of the exemption or concession they intend to claim.

To take advantage of the new duty concessions, the following requirements must be met:

  1. The duty charged must be in respect of an eligible transfer.
    An eligible transfer is a contract, arrangement or agreement for the transfer of dutiable property.
  2. The contract, arrangement or agreement must have been entered into on or after 1 July 2019.
    Where a contract has been entered into prior to 1 July 2019, the duty concession does not apply, even where settlement will take place after 1 July 2019.
  3. The relevant property must be located in regional Victoria.
    Regional Victoria is defined here to include properties located in 48 municipal council areas and the six (6) alpine resorts. Included in the list of council areas are the Greater Geelong City Council, the Surf Coast Shire Council, the Colac Otway Shire Council and the Ballarat City Council.
  4. The transferee must intend to use the property solely or primarily for a qualifying use.
    A qualifying use includes land use that is:
    1. Commercial – for example retail use and offices;
    2. Industrial – for example factories or warehouses; or
    3. Extractive industries – for example mines or quarries.

The property does not have to be used for the qualifying use at the time of the transfer.  Div 5A requires only that the transferee must intend to use the property for the qualifying purposes for a continuous period of at least twelve months within two (2) years of becoming entitled to possession of the property.

This means that the concession may be available, for example, for the purchase of vacant commercial or industrial land on which the transferee intends to build and operate a business which will meet the qualifying use requirement within the relevant time period.

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