The first round of State Budgets has been released, with Victoria, the ACTand NT all making announcements on 4 May 2010, Western Australia on 20 May 2010, and other States and Territories to follow suit shortly. The grip of the global financial crisis has not yet left us and it could be expected that in the 2010 State Budgets, the trend will be one of clinging to revenue and possibly even deferring the planned abolition of certain duties.

Abolition of Duties?

There is no immediate obligation on the States to abolish further duties. Under the Intergovernmental Agreement on Federal Financial Relations, the States and Territories are obliged to abolish a number of taxes and duties by 1 July 2013, including duty on marketable securities and duty on non-land business assets.

The Hon. John Lenders MLC, as part of the Victorian State Budget, pointed out that Victoria was the first to abolish all taxes and duties required under the Intergovernmental Agreement, and remained one of only two States and Territories to have done so. This is in contrast to, for example, Queensland, which is currently the only State or Territory to have taken advantage of the ultimate deadline of 1 July 2013 to abolish duty on non-land business assets.

However, in March 2010, WA introduced the Revenue Laws Amendment Bill 2010 (WA) into Parliament, and, assuming the Bill becomes law, it will defer the abolition of duty on non-land business assets in that State from 1 July 2010 to 1 July 2013.

Victoria

The Victorian Government announced that the land tax exemption for retirement villages and residential care facilities will be extended from the 2011 land tax year to include the period during which the facility is being constructed. The exemption will apply for a maximum period of two years from the start of construction.

The Victorian Government also announced a cut in the payroll tax rate from 4.95 per cent to 4.90 per cent and a cut of 3.5 per cent in workcover premiums.

Also of interest was the announcement of the development and introduction of a web-based system to streamline the payment of land transfer duty.

Western Australia

The Western Australian Government announced an extension of the land tax concession for caravan parks from 50 per cent to a 100 per cent exemption, commencing 1 July 2010. However, the concession can be clawed back for up to ten years if the caravan park is redeveloped for an alternative use. Caravan park land used for accommodation such as chalets and cabins is not eligible for the concession.

Northern Territory

The Northern Territory Budget included an increase in the First Home Owner concession and the Principal Place of Residence rebate, as well as an extension of these concessions to purchasers of homes under long-term leases granted under section 19 or 19A of the Aboriginal Land Rights (Northern Territory Act 1976) (Cth). The NT Government also introduced a new concession for the purchase of homes by seniors, pensioners and carers.

On the other side of the coin, the NT Government announced an increase in the mineral royalty rate from 18 per cent to 20 per cent and an amendment to lease duty to clarify that it will also apply where valuable consideration is given for an option under which a lease is granted.

In addition, the NT Government announced that the exemption from landholder duty for interests acquired pursuant to a finance arrangement will be tightened so that prima facie duty will apply, but there will be a deduction where the Commissioner is satisfied that the acquisition is for finance purposes. However, the deduction is only retained if the borrower reacquires the interest within five years or the financier sells the interest in exercise of a mortgagee's power of sale within five years.

ACT

No new revenue measures were announced by the ACT Government.

Further State Budgets

South Australia, NSW and Queensland are set to release State Budgets on 8 June 2010. Tasmania is due to release its State Budget on 17 June 2010.

The Norton Rose tax group can assist with any queries relating to the State Budgets or to State taxes and duties generally.

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.