Bulk-billing support initiative

To counteract the increased cost of living pressures, the NSW government has introduced an exemption and rebate on payroll tax liabilities for payments to contractor general practitioners (GPs) by medical practices meeting the relevant bulk-billing threshold. The relevant bulk-billing thresholds for Sydney and the rest of NSW is 80% and 70% respectively.

In addition, historical unpaid payroll tax liabilities for pre-4 September 2024 payments made to contractor GPs will be exempt from payroll tax. After the 4^th of September 2024, medical practices meeting the bulk-billing threshold requirements will be eligible to receive a complete rebate for payroll tax associated with the payments made to contractor GPs. 

The aim of this measure is to support accessibility and affordability of health-care by incentivising medical practices to increase bulk-billing to gain eligibility to the rebate. It was projected that this measure is expected to reduce payroll tax revenue for NSW by roughly $180.8 million over the next four years, though the actual impact is likely to be less as medical practices restructure affairs such that the payroll tax obligation does not arise in the first instance.

How SW can help

Medical practices operating in NSW should carefully consider the above changes and how they might take advantage of the upcoming relief initiative. For instance, GP clinics may like to consider the structure of their arrangements with GPs where they meet the threshold requirements, particularly where GPs are engaged as employees.

Some important things to consider are whether the practice is eligible under the bulk-billing threshold requirement as well as reviewing contracts with GPs and the overall billing practices to ensure everything all information is accurately taken into consideration. 

For those practices where the measures do not apply, it is worth considering whether and how contractor arrangements may be restructured to reduce adverse payroll tax implications. In addition, it may be worth considering which payments at or around the cut off time may be eligible for the exemption.

Contributors

Oliver McDonald

The post NSW Bulk billing GP clinics given payroll tax concessions appeared first on SW Accountants & Advisors.

From the 2025 land tax year (1 January 2025), the NSW Government will increase the rate of the foreign purchaser duty surcharge from 8% to 9%.

The foreign resident duty surcharge is levied on foreign buyers of residential property in NSW, with various exemptions available. This includes Australian incorporated property developers (and trustee companies) being able to seek a refund of the surcharge paid within 12 months of a sale of a home on residential land or sale of a residential lot, if the land has been held for less than 10 years.

From January 2025, the NSW Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign persons, foreign companies, trustees of foreign trusts, from 4% to 5%.

Existing exemptions continue to be available from the land tax surcharge, including Australian developers being able to seek a refund (where eligibility requirements are met).

For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.

How can SW help?

SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. This includes advising on refunds or exemptions for property developers, build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the specific advantages and disadvantages of different property assets.

If you would like any further information, please contact a member of the SW tax team.

Contributors

Robert Parker

Eric Lay

The post NSW Budget | foreign owner duty & land tax surcharges appeared first on SW Accountants & Advisors.

1. Corporate reconstruction and consolidation exemption concession amended to a 90% concession

The 100% duty exemption currently in place for eligible corporate reconstruction and consolidation transactions will be replaced with a concession requiring only 10% of the duty that would otherwise be payable to be paid.

Under the proposed transitional rules, the rules currently in force (i.e. a 100% exemption) are still expected to apply to:

• transactions occurring before 1 February 2024, or
• a transaction occurring on or after 1 February 2024 if an application for the exemption is made on or before 1 April 2024 and the transaction arose from an agreement or arrangement entered into before 19 September 2023.

2. Landholder amendments

a. Landholder acquisition thresholds for private unit trust schemes

The threshold for the acquisition of a significant interest in a private unit trust that is a landholder will be reduced from 50% to 20% for acquisitions in private unit trusts after 1 February 2024 (unless it relates to an acquisition from an agreement or arrangement entered into before 19 September 2023).  

However, the 50% threshold will remain for acquisitions in:

• private companies
• unit trust schemes which are registered with Revenue NSW as a wholesale unit trust or imminent wholesale unit trust. These are a new category of unit trust (see below).

The 90% acquisition threshold for ‘public landholders’ (i.e., certain listed companies, certain listed unit trusts and widely held unit trust schemes) remains unchanged.

b. Landholder acquisition thresholds for wholesale unit trust scheme and proposed wholesale unit trust scheme registration

A separate regime is intended to be introduced for wholesale unit trusts. Under the proposed amendments, the Chief Commissioner may register wholesale unit trust schemes, which is expected to have the effect of preserving the 50% acquisition threshold for these entities.

The Chief Commissioner may register a private unit trust scheme as a wholesale unit trust scheme if satisfied that:

• it was not established for a particular investor
• at least 80% of its units are held by ‘qualified investors’ (including listed companies and trusts, public superannuation funds and other wholesale unit trust schemes)
• no qualified investor (alone or in aggregate with associated persons) holds 50% or more of its units
• any other requirements specified by the Chief Commissioner to be published in a gazette (not yet published). Note, the Victorian registration requirements are not similarly open ended.

The Chief Commissioner may register the private unit trust scheme as an “imminent wholesale unit trust scheme” if satisfied it will meet the abovementioned criteria within 12 months of the first issue of units to a “qualified investor”.

The Chief Commissioner may also cancel the registration if satisfied of any disqualifying circumstances, such as a failure to comply with a condition of registration. This may result in any historical acquisitions in the unit trust scheme as being assessable.

Acquisitions in a trust are taken to be acquisitions in a registered wholesale unit trust scheme or an imminent wholesale unit trust scheme if:

• the acquisition occurs on or after 1 February 2024, and
• an application is made to register the scheme before 1 May 2024, and is subsequently approved.

c. Changes to tracing / linked entity rules

The threshold for tracing property through linked entities of a landholder will also be reduced from 50% to 20%, similar to Victoria and Northern Territory.

The changes to the above landholder duty provisions will apply to acquisitions that are completed on or after 1 February 2024 unless they arose from an agreement or arrangement entered before 19 September 2023.

This change is significant as many more entities will be treated as landholders e.g. a company holding a 25% interest in a landholding company or trust. Transactions involving upstream entities will need to be carefully managed.

3. Increase in fixed and nominal duty amounts

The fixed and nominal duty amounts for various transactions under the Duties Act 1997 (NSW) will be increased. For example, this includes increases in the nominal duty:

• on a declaration of trust over unidentified property signed in NSW (or electronically by a trustee based in NSW) from $500 to $750
• on transfers occurring in conformity with an agreement upon which duty has been paid, from $10 to $20
• on certain concessions, including change of trustee concession from $50 to $100, or certain managed investment scheme concessions from $50 to $500. 

These changes will apply to most transactions occurring on or after 1 February 2024, regardless of whether they arise under an arrangement entered into before this date.  The exception being that nominal duty for transfers of land under agreements entered into before 1 February 2024 will remain at $10.  

4. End to the duty exemption for certain zero and low emission vehicles

The exemption from motor vehicle registration duty ceases to be available to zero and low emission vehicles from 1 January 2024.  The transitional provisions allow battery electric vehicles and hydrogen fuel cell electric vehicles purchased (or for which a deposit was paid) before 1 January 2024 but that had not yet been registered by that date to continue to access the exemption.

5. Other minor amendments

• revise the land tax indexation formula to ensure that the NSW Valuer General can determine the correct land tax threshold for the 2024 land tax year
• require that a person occupying a property as their principal place of residence must own at least a 25 per cent interest in the property to be eligible for the land tax exemption. The transitional provision provides that those who already claim the principal place of residence exemption but own less than 25% may continue to claim the exemption for the 2024 and 2025 land tax years. The minimum ownership requirement will then apply to those owners from the 2026 land tax year
• re-enact a power of the Chief Commissioner to remit interest and include a new power for the Chief Commissioner to issue guidelines about how interest must be remitted.

How SW can help?

Reach out to our state taxes experts if you would like to discuss further.

Contributors

Robert Parker

Wasi Hussain

The post NSW Budget 2023-24: Major changes to the NSW duty appeared first on SW Accountants & Advisors.