Stamp duty surcharge carve outs secured in Victoria

Hotels and retirement villages will no longer pay the Victorian foreign investment stamp duty surcharge following successful Property Council advocacy.

The Victorian Government’s decision to increase its stamp duty charge on foreign investors from 3 to 7 per cent from July 1 was widely criticised as a handbrake on jobs, growth and investment in the state.

The stamp duty surcharge, together with an increase in the ‘absentee landholder’ surcharge from 0.5 per cent to 1.5 per cent, effective from the 2017 land tax year, was expected to raise $486 million over four years.

However, the Property Council’s acting executive director in Victoria, Asher Judah, says consistent advocacy work has carved out property categories that should never have been subject to the new taxes.

“Eight weeks ago, members with hotel and retirement living interests were facing a 7 per cent stamp duty increase in Victoria,” Judah says.

“As a result of our advocacy work, we have secured ‘carve outs’ which will mean they will pay nothing. This is a clear benefit for those members.”

Discussions with the Andrews Government, the Opposition and the Greens has led to amendments to the State Taxation and Other Acts Amendment Bill 2016 which will exempt foreign investors from paying the surcharge on commercial residential property purchases.

“These amendments, which have now passed through the Victorian Parliament, excise commercial residential premises from the definition of ‘residential property’,” Judah explains.

This means that premises like hotels, motels, serviced apartments and student accommodation will not be captured by the duties surcharge, and neither will retirement villages, residential care villages and supported residential services.

“This is a welcome decision and we have thanked the Andrews Government for enacting it,” Judah adds.

“We are now developing a long-term strategy to see these harmful taxes eliminated for all property streams, including residential.

“We are strongly opposed to additional taxes on foreign investment, as it discourages investment and dampens competition in the market.

“We remain disappointed that the government has refused to amend its Bill to allow trusts to apply for exemptions. We will continue to pursue this matter, and to oppose the imposition of foreign investor taxes which erodes confidence, and with it jobs and housing for Victorians.”