Stamp duty abolition green light for investment

The peak body for Australia’s $680 billion property industry has welcomed the abolition of commercial conveyance stamp duties, labelling it a bright green light for investment.

The Property Council of Australia today commended the State Government on this decision, which will encourage local, interstate and possibly foreign investment stimulation.

STAMP DUTY
“Taking an axe to stamp duty on non-residential property transfers sends a strong message of confidence to South Australia’s small- and medium-sized enterprises, along with our state’s family business sector,” said SA Executive Director Daniel Gannon.

“The Property Council of Australia has fought long and hard to put stamp duty abolition on the table – today we have seen the State Government heed that call and budget for the abolition of commercial conveyance stamp duties.

“Stamp duty on commercial property transactions will be phased out over three years commencing on 1 July 2016 until its complete abolition on 1 July 2018, which represents an historic win for the sector and for job creation in South Australia.

“The savings this presents for commercial investment are immense. As an example, the stamp duty saving on a $1 million commercial property purchase equates to $48,830, while on a $5 million investment it presents a $268,830 saving. A $10 million transaction after 1 July 2018 will see a saving of $543,830.

“The removal of this deadweight business tax is a green light for investment and a positive platform for investment hunting, and will also accelerate transaction activity across the state.

“The State Government must be commended on this decision, which will stimulate local, interstate and foreign investment.

“Fewer taxes mean greater prospects of job creation and economic stimulation, particularly in the wake of this month’s worrying jobs data.”

Mr Gannon said South Australia’s property sector employs more than 168,000 people, represents almost 11 per cent of GSP, and accounts for 42 per cent of state taxation revenue.

“Taxes are meant to lean lightly on our economy, not act as a barrier to activity, transaction, job creation and prosperity, but that’s exactly what stamp duty does,” he said.

“As it stands, our state does not boast a ‘top end of town,’ but this decision might encourage just that – and this means jobs, prosperity and strong local communities.”

Property Council Chief Executive Ken Morrison applauded the South Australian Government’s leadership on tax reform and encouraged the other states and territories to follow its lead.

“The South Australian Government has taken the tax reform leadership mantle and we applaud this bold plan announced today,” said Mr Morrison.

“Boards across the country will be sitting up and taking another look at South Australia as a result of this decision.

“Abolishing conveyancing stamp duty for commercial transactions gives South Australia an instant and powerful, competitive advantage over other jurisdictions.

“It is a significant job creation measure and a critical first step to broader stamp duty and tax reform.

“The Federal Treasury and two major tax reviews have concluded that stamp has the highest cost to living standards and economic growth.

“Removing stamp duty completely will require the cooperation of all governments and we urge them to use the current federal tax white paper process as the vehicle for this all-important change.”

PAYROLL TAX
In other news, the Property Council has also been advocating for reform to payroll tax to ensure harmonisation across states and territories and less complexity for organisations that work across jurisdictions.

“The property sector is pleased to see the Treasurer taking up this cause at the national level with the Commonwealth, States and Territories.

“In South Australia we need to strive for a level playing field to remove competitive advantages currently held by other jurisdictions.”

FOREIGN INVESTMENT
In more good news for the property sector, the State Government has heeded the Property Council of Australia’s calls and has not imposed a tax on foreign investors, which is another positive outcome for South Australia’s attractiveness as an investment destination.

“Nationally, foreign investment is underpinning Australia’s record levels of new housing construction, which is a rare success story for our national economy at the moment,” said Mr Gannon.

“A national wave of new housing construction that benefits Australians by creating jobs and making housing more affordable has been driven by foreign investment.

“Following Victoria’s introduction of a foreign-investor tax, the Property Council of Australia has lobbied the Government to rule out a similar punitive tax here.

“South Australia is in an investment competition with the rest of the country and globally when it comes to attracting foreign investors, and when combined with commercial conveyance stamp duty abolition, our state’s investment appeal is heading in the right direction.”

LAND TAX
“The State Government has announced some minor tweaking which has increased land tax thresholds, which will be in operation from 1 July 2015.”

“These tweaks are welcomed, but the Property Council of Australia will continue to fight for even lower land tax rates and systemic change to land tax aggregation to make South Australia the most competitive place to invest.

“Ideally, our state’s system would boast alignment with other jurisdictions to remove any competitive advantage held by others. For example, the top land tax rate in Queensland is only 1.75 per cent, while in our state that rate is 3.7 per cent.

“That means we need to increase our land tax regime’s long-term attractiveness.”