Commercial stamp duty reform passes

The Commercial and Industrial Property Tax Reform Bill 2024 introduces a new regime from 1 July 2024.  

From that date once a property is sold it will transition into a new system, with stamp duty being payable one final time on the property. Then, after ten years, a tax will apply at a rate of 1 per cent of the property’s unimproved land value.

“ 'It will make it easier for businesses to expand or set up in the best location, for example closer to their customers or where there is a growing workforce.' ”

Tim Pallas, Treasurer

The bill also provides for transition loans from the the Treasury Corporation of Victoria to help businesses fund their final stamp duty payment. 

In his second reading speech Treasurer Tim Pallas said the new regime ‘will make it easier for businesses to expand or set up in the best location, for example closer to their customers or where there is a growing workforce’.

“ 'Those that sit on a single property for a long time pay virtually no tax, leaving the previous group to pick up the tab.' ”

Evan Mulholland, Member for Northern Metropolitan

During debate in the Legislative Council, Member for Northern Metropolitan Evan Mulholland said the opposition supported the bill but would move amendments to propose a tax rate of 0.8 per cent in metro areas and a rate of 0.4 per cent in regional areas. 

‘Stamp duty is a tax on transactions, and as a result it penalises those who need to buy or sell property or those that would like to,’ he told the Legislative Council.

“ ‘We do need to see a similar transition scheme for residential properties, and we would strongly encourage the government to continue to explore reform in that space.’ ”

Katherine Copsey, Member for Southern Metropolitan

‘At the same time those that sit on a single property for a long time pay virtually no tax, leaving the previous group to pick up the tab. There is no reason why this is desirable. In fact it is quite undesirable,’ he said. 

Southern Metropolitan MP Katherine Copsey described the bill as a positive first step, but said there was more to do. 

‘We do need to see a similar transition scheme for residential properties, and we would strongly encourage the government to continue to explore reform in that space,’ she said. 

John Berger, Member for Southern Metropolitan said stamp duty ‘is one of the most inefficient taxes, driving up the costs of moving a business or investing in the local economy’. 

‘This tax reform will be in effect a tax cut of $266 million for businesses over the next four years and is estimated to add 12,600 jobs to the Victorian economy,’ he said. 

Member for Northern Victoria Gaelle Broad spoke in favour of amendments proposed to apply the new rate at a discount for rural commercial property investors.

“ ‘This tax reform will be in effect a tax cut of $266 million for businesses over the next four years and is estimated to add 12,600 jobs to the Victorian economy.’ ”

John Berger, Member for Southern Metropolitan

‘We do need to maintain and build the incentive for businesses to move to regional Victoria, because it is so important that we become a state of cities, not a city-state,’ she said.  

David Limbrick, Member for South-Eastern Metropolitan said he supported the tax change, though believed the bill should go further and abolish stamp duty altogether. 

'I think everyone is in universal agreement that stamp duty is an awful tax – an inefficient tax that causes capital misallocation and all sorts of other problems,’ he said. 

The bill passed without amendment. 

The full debate is available to read in Hansard.