The State Taxation Further Amendment Bill 2024 (the Bill) received Royal Assent on 3 December 2024.

The key changes proposed by the Bill include:

• further duty exemptions for land in the Commercial and Industrial Property Tax (CIPT) Scheme
• reinforcement of the existing Foreign Purchaser Additional Duty (FPAD) and Absentee Owner Surcharge (AOS) provisions and
• a new land tax exemption for charitable housing providers.

Other amendments to payroll tax and other minor exemptions have also been proposed. We have unpacked these major state taxation changes below.

Key changes explained

Further Commercial and Industrial Property Tax (CIPT) exemptions

The CIPT scheme was introduced to replace stamp duty for future transactions involving commercial and industrial properties that have entered and continue to qualify under the scheme (referred to as CIPT Land). For further details take a look at our webinar or article on CIPT.

Under the newly introduced framework, stamp duty is intended to be levied one last time when a property enters the CIPT scheme through an initial qualifying transaction (‘entry transaction’).  

Despite inclusion into the CIPT scheme, certain subsequent transactions (‘non standard transactions’) involving dutiable leases, fixtures and economic entitlements remain subject to duty.

The Bill introduces changes to provide upfront exemptions and concessions for ‘non-standard transactions’ which are defined as transactions such as the grant, transfer, or surrender of dutiable leases, or the acquisition of fixtures or economic entitlements related to CIPT Land.

Non-standard transaction exemptions

These ‘non-standard transactions’ will be exempt from duty if one of the following applies:

• at least three years have passed since the land entered the CIPT scheme, and the non-standard transaction agreement is made after this period or
• the entry transaction involved a 100% interest in the land, or the total interests transacted in the land amount to 100% and
• the value of the CIPT land when it entered the CIPT regime was not reduced by a lease over the land, economic entitlement in relation to the land and did not exclude the value of an interest in fixtures on the land.

The above upfront exemption is aimed at circumstances where appropriate duty has previously been paid as part of the land entering the CIPT.  

Where full duty has not been paid, the Commissioner may exercise discretion to waive or reduce the duty payable on these transactions. The Commissioner considers:

• the proportion of the initial interest acquired during the entry transaction and any additional interests subsequently acquired in the land
• the degree to which the land’s value was diminished by other interests, such as leases, economic entitlements, or excluded fixtures, at the time the entry transaction was assessed for duty
• the time interval between specific transactions related to the land
• any other factors the Commissioner deems relevant.

Foreign Purchaser Additional Duty (FPAD) & Absentee Owner Surcharge (AOS) provisions

Under the Duties Act 2000 (Vic), FPAD applies extra taxes on the acquisition of residential land by foreign purchasers in Victoria. Similarly, under the Land Tax Act 2005 (Vic), the AOS imposes additional taxes on foreign owners holding land in Victoria.

The amendments are intended to address the risk that the existing provisions were invalid by reason of an inconsistency with theInternational Tax Agreements Act 1953 (Cth), which gives force to certain non-discrimination clauses in international tax treaties.

The Commonwealth Act was amended to explicitly state that state taxation laws override these international tax agreements in cases where these is an inconsistency. Despite this clarification, there remains a risk that courts could find the historical application of the FPAD and AOS invalid if they are deemed inconsistent with the Commonwealth law as it was at the time the alleged tax liabilities were incurred.

The new proposed provisions outline that if an FPAD or AOS liability is found to be invalid because of an inconsistency, a new replacement tax will be imposed which will mirror the original liability.

The proposed amendments will have the following practical effect, notwithstanding that the amendments will not apply if the liabilities are determined to be valid:

• if the FPAD or AOS liability between 1 January 2018 and 8 April 2024 are deemed invalid, the taxpayer will still owe the same equivalent amount under the new provisions and
• in circumstances where the taxpayer has paid the FPAD or AOS liability, the previous payment of the invalid tax will satisfy their liability under the replacement tax.

These proposed amendments ensure that the Victorian taxes are imposed as they were intended.

Exemption for charitable housing providers

The proposed changes under the Bill create a new exemption under section 78D of the Land Tax Act 2005 (Vic) (Housing provided for the relief of poverty) which applies to land owned, managed, or controlled by a charitable institution that is occupied, or available for occupation, by residents solely in connection with the institution’s charitable purpose of relieving poverty.

The new exemption is also available to vacant land owned by a charitable institution and declared to be held for such future use and occupation. However, the caveat to this is that the Commissioner must be satisfied that the land will be exempt land within 2 years, or a period longer as approved by the Commissioner.

As is the case with other land tax exemptions, the exemption may apply on a partial basis if the Commissioner is satisfied that only a part of land is land that meets the exemption requirements. Land tax will remain assessable on the part of the land that is not exempt.

How SW can help

Contact one of our state taxes experts to discuss how the proposed amendments may impact you.

Contributors

William Zhang  

Blake Trad 

Robert Parker

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Embark on a journey into the fundamentals of fund management as SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell share invaluable advice tailored for first-time fund managers. Uncover the key insights, strategies, and essential knowledge that lay the groundwork for a successful venture into the world of fund management.

In the second episode, SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell unravel the complexities of capital sourcing, focusing on the pivotal task of raising the initial $25 million. Discover proven strategies, actionable tips, and real-world experiences that illuminate the path for fund managers seeking to secure the crucial capital to kickstart their investment journey.

Join SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell in the final chapter of this enlightening series, where they explore the ever-evolving investment market trends. Delve into the realms of Build-to-Rent (B2R), Build-to-Sell (B2S), and Managed Investment Schemes (MIS). Gain a comprehensive understanding of these trends, empowering fund managers to navigate the dynamic landscape of investment opportunities.

The post Polar 993 Founder Adam Lindell talks fund management insights with SW’s Director Rick Hemphill appeared first on SW Accountants & Advisors.

The training session provided the opportunity to maintain and develop expertise in managing the compliance for property funds, and assist with processes when working with an accounting firm such as ours.

The session delivered a deeper insight into the technical and information requirements when preparing accounts, demonstrated how tax components are calculated and common accounting vs. tax differences.

Our property fund experts spent time running through the basic accounting and tax knowledge of property trusts, and extended across the following topics:

• Recent 2023-24 Federal Budget update
• Recent 2023-24 Victorian and WA State Budget update
• Key financial reporting requirements for funds
• Common issues for ordinary trusts, MITs and AMITs – including issues that also affect equity and debt funds

SW Speakers

René Muller
Partner, Assurance and Advisory Services
SW 

Luke Fernandes
Associate Director, Tax
SW 

The post Property funds | Tax & Accounting technical training appeared first on SW Accountants & Advisors.

The training session provided the opportunity to maintain and develop expertise in managing the compliance for property funds, and assist with processes when working with an accounting firm such as ours.

The session delivered a deeper insight into the technical and information requirements when preparing accounts, demonstrated how tax components are calculated and common accounting vs. tax differences.

Our property fund experts spent time running through the basic tax knowledge of property trusts, and extended across the following topics:

• Removal of special purpose financial reporting
• Key financial reporting requirements for property funds
• Managed Investment Trusts and Attribution Managed Investment Trusts
• General taxation of trusts
• Calculation of taxable income and tax deferred income
• Accounting vs. tax differences and common adjustments

SW Speakers

René Muller
Partner, Assurance and Advisory Services
SW 

Luke Fernandes
Associate Director, Tax
SW 

Carmelin De Francesco
Senior Manager, Tax
SW 

The post Property funds | Tax & Accounting technical training appeared first on SW Accountants & Advisors.

We take the lead supporting tomorrow’s leaders with our Emerging Property Fund Series in Melbourne and Sydney.

This interactive five part series is facilitated by our own property funds specialists and industry experts, who will provide strategic insight into property funds management and key issues ranging from structuring, debt and equity through to legal and compliance.

Benefits of attending

• Learn how to protect your business and personal assets
• Different approaches to structuring your product
• Identifying methods to raise your debt and equity capital
• Market trends in the different asset classes
• Tax issues arising from different structure
• Effective exit strategies for your investors

Event details

Date: 5 sessions hosted on a monthly basis starting Wednesday, 23 October 2019 (Melbourne) / Thursday, 24 October 2019 (Sydney)
Time: 5:45pm – 8pm (canapes and refreshments provided)
Melbourne Venue: ShineWing Australia, L10, 530 Collins Street, Melbourne
Sydney Venue: ShineWing Australia, L8, 167 Macquarie Street, Sydney
Format: Interactive class-room style
Cost: $800 per person for the series or group booking for up to 3 people for $1,600 (prices exclude GST)

This includes:

• Five 2-hour sessions and networking opportunities with speakers and attendees
• Soft and hard copies of speaker presentations and handouts
• Automatic inclusion to our Emerging Property Funds Series, including invitations to future networking events

Session topics and dates 

Session 1: Fundamentals for Success, Property Funds – Wednesday, 23 October 2019 (Melbourne) / Thursday, 24 October 2019 (Sydney)

Speakers/Panelists: Howard Brenchley (APN Property Group), Paul Healy (Property Funds Association), Stuart Wilton (Centuria), Steven Bennett (Charter Hall) and Stephen O’Flynn (ShineWing Australia)

This introductory session will provide a brief overview of the series structure. You will hear first-hand from industry specialists the key lessons they’ve learnt, what challenged them the most, what worked, what didn’t and tips on building the right team.

Session 2: Fundamentals for Success, Personal and Business Issues – Wednesday, 27 November 2019 (Melbourne) / Thursday, 28 November 2019 (Sydney)

Please note, the Sydney session will be at 3pm – 5pm on this day.
Speakers/Panelists: Daren McDonald (ShineWing Australia) and Abi Chellapen (ShineWing Australia)
How do you separate your business fund from your personal assets? In this second session you will learn how to protect yourself, your funds and the appropriate ownership structures recommended to protect your investment and maximise your return.

Session 3: Fund Structuring – Wednesday 26 February 2020 (Melbourne) / Thursday, 27 February 2020 (Sydney)

Speakers/Panelists: David Southon (Aliro Group), Matthew Chun (Development & Property Consultant) and Simon Tucker (ShineWing Australia)
You may have a plan, but do you know which fund structure will give you the best competitive advantage? The industry experts will talk you through the fund structure matrix which covers local and international equity, fee structure and more.

Session 4: Debt and Equity – Wednesday, 25 March 2020 (Melbourne) / Thursday, 26 March 2020 (Sydney)

Speakers/Panelists: Warren Boothman (Open Corp), John Taylor (Crestone), Dan Freeman (Commonwealth Bank) and Matthew Schofield (ShineWing Australia)
This session covers everything you need to consider and what to avoid in modern-day financing. Identify both the traditional and alternative methods for obtaining funding, how to strike a deal with the banks and how best to raise your debt and equity.

Session 5: Legal, Regulatory and Compliance – Wednesday 22 April 2020 (Melbourne) / Thursday, 23 April 2020 (Sydney)

Speakers/Panelists: Legal advisor, Rene Muller (ShineWing Australia) and Rami Eltchelebi (ShineWing Australia)
Ensuring your i’s are dotted and t’s are crossed are important for the property funds management industry. Our experts will talk you through the documentation and practical application involved in your fund set-up and provide tips on avoiding common pit-falls to ensure you stay compliant.\

More information

Know someone interested in property fund management? You are welcome to direct any interested property professionals to this web page or to the ShineWing Australia Marketing team via marketing@sw-au.com.

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