On Tuesday, June 18, 2024, NSW Treasurer Daniel Mookhey presented the 2024-25 NSW State Budget. With an $11.9 billion shortfall from this year’s GST distribution, the 2024-25 NSW State Budget focuses on essential expenditures while avoiding large-scale cost-of-living measures for households. Key strategies include heightened compliance activities and increased costs for foreigners acquiring and holding property in NSW, aimed at reducing the state’s debt.
Below we outline several key proposed measures and their potential impact on you and your business, both now and in the future.
What Tax/Duty Areas Are Affected? What Is Changing?
The key areas identified to increase state budget revenue in the coming years include:
- Land tax thresholds to increase,
- Revenue-NSW to increase compliance activity,
- GP payroll tax rebate,
- GST Revenue.
Land Tax Thresholds
Land tax thresholds were increased on 1/1/2024 and will be maintained at the current level for the next 4 years. The halt in indexing means that owners of investment properties and holiday homes will need to pay land tax once their property values exceed $1.075 million. These measures are expected to generate an additional $1.5 billion in budget revenue over the next four years.
From 1/1/2025 the foreign purchaser duty surcharge will increase to 9 percent, up from 8 percent, and a 5 percent land tax surcharge, up from 4 percent, on residential properties. These two measures are projected to increase revenue by $188 million.
Revenue-NSW Increase Compliance
The NSW Government will increase its revenue compliance activities.
The NSW Government will bolster its efforts to increase revenue by improving compliance with NSW revenue laws.
The areas of focus will include:
- Land Tax Compliance: This could involve ensuring strict compliance with land tax exemptions, such as those related to the primary production exemption and principal residence exemptions.
- Reduce Debt Write-Off Decisions: Revenue NSW may adopt a more stringent approach to collecting outstanding debt, including increasing efforts to collect unpaid parking fines, land tax, and payroll taxes.
Payroll Tax Relief to Bulk-Billing GP Clinics
The $188.8 million Bulk-Billing Support Initiative aims to alleviate financial pressure on GP practices by providing tax relief to those that meet bulk-billing thresholds. This includes waiving historical payroll tax liabilities for payments made (only) to GP contractors up to 4 September 2024.
Starting September 4, 2024, medical centres that meet the required bulk-billing thresholds will be eligible for a payroll tax rebate on payments to contractor GPs.
This initiative is designed to help ease the cost of living for families and households by preventing clinics from passing on additional costs to patients.
GST Revenue
As NSW is in a $11.9 billion shortfall owing to this year’s Goods and Services Tax (GST) carve-up. Rather than 92 cents from every dollar of GST paid in the state, NSW will now only get 87 cents in the dollar.
Mr. Mookhey stated that the Commonwealth Grant Commission’s decision has resulted in more lost revenue for NSW than the COVID-19 pandemic. “For every dollar that Victoria will give to the smaller states next year, NSW will give upwards of four,” he said in his budget speech.
He said the government would absorb the $11.9 billion hit to the bottom line, but it would lead to deficits over the four years of forward estimates.
Seeking professional advice is important when it comes to dealing with state-based taxes and duties. Contact The Quinn Group by completing an online enquiry form or call 1300 QUINNS or +61 2 9223 9166 to arrange a meeting or teleconference.
Expert NSW State Tax & Duties Advisors
As tax accountants and tax lawyers based in Sydney, NSW, the team at The Quinn Group are experienced in dealing with all facets of Revenue NSW and the various state based taxes, duties and obligations.
Whether you are seeking to understand how the recent 2024-25 NSW State budget announcements may affect you, or for expert advice regard any state-based taxes and duties, contact us by completing an online enquiry form or call 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange a meeting or teleconference.
