NSW Budget 2022–23, 21 June 2022

The New South Wales Treasurer, Mr Matt Kean, handed down the NSW Budget 2022–23 on 21 June 2022.

It includes the following measures relating to tax.

First Home Buyer Property Tax Option. First home buyers will be provided with an option to pay an annual property tax instead of stamp duty if the purchase price of the property is $1.5 million or less. The property tax will be based on the property's unimproved land value. The annual owner-occupier property tax rates will be set at $400 plus 0.3% of the property's unimproved land value in 2022–23. These rates apply as long as the first home buyer remains an owner-occupier. The measure will apply from 16 January 2023.

Eligible first home buyers that exchange contracts in the period between enactment of legislation and 15 January 2023 will be able to opt in and receive a refund of transfer duty paid.

Reduction in the discount available for early payment of land tax. The land tax early payment discount will be lowered to 0.5% (currently 1.5%) from 1 January 2023.

Increase to the foreign investor surcharge land tax. The foreign investor land tax surcharge of 2.0% will increase to 4.0% per annum from the 2023 land tax year.

Payroll tax relief for employers of age care workers. Payroll tax relief will be offered to employers of aged care workers who pass on payments received under the Commonwealth's Aged Care Workforce Bonus Payment program to their workforce. Eligible aged care employees can receive payments totalling up to $800 under the program. These payments would otherwise have been liable for payroll tax under the Payroll Tax Act 2007 (NSW).

Payroll tax exemptions under a subprogram of the "Future Economy Fund". A subprogram of the Future Economy Fund will offer grant payments and payroll tax exemptions to encourage businesses of future industries to establish or expand in New South Wales.

The Future Economy Fund will be established to target the end-to-end stages of business growth; from research and development and commercialisation, through to industry growth right to investment attraction and maturity.

Increase to the point of consumption (PoC) tax and changes to other betting taxes. From 1 July 2022, the PoC tax rate will increase to 15% and the effective betting tax rates (including totalizator and fixed odds bets) charged under the Betting Tax Act 2001 (NSW) will be adjusted to 15%. The basis of PoC industry funding under the Betting Tax Act 2001 will change from 2% of net wagering revenue to 33% of PoC tax revenue collected by the government.

Sources: NSW Budget 2022–23, Budget Statement, 21 June 2022, accessed 21 June 2022; Premier of NSW, Dominic Perrottet, Treasurer and Minister for Energy, Matt Kean and Minister for Planning and Minister for Homes, Anthony Roberts, "Opening Doors for More First Home Buyers", [media release], 21 June 2022, accessed 21 June 2022.

NSW: Details of stamp duty reform announced, 21 June 2022

As previously reported, the NSW government is planning to overhaul the stamp duty regime in NSW to allow a buyer to opt out of paying stamp duty and instead pay an annual property tax. Details of the scheme have now been released with the government announcing that the scheme will only apply to first home buyers.

A first home buyer will be able to opt into the First Home Buyer Choice and elect to pay an annual property tax instead of stamp duty if the purchase price of the property is $1.5 million or less. The annual property tax will be $400 plus 0.3% of the land value of the property.

A property will not be locked into the scheme if it is sold.

Legislation to establish the annual property tax will be introduced during the second half of 2022 with first home buyers able to apply to opt into the property tax from 16 January 2023. For contracts exchanged in the period between enactment of the legislation and 15 January 2023, first home buyers will be able to opt-in from 16 January 2023 and receive a refund of stamp duty already paid.

First home buyers will continue to be eligible to apply for a full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.

Further information is available here.

Source: Premier of NSW, Dominic Perrottet, Treasurer and Minister for Energy, Matt Kean and Minister for Planning and Minister for Homes, Anthony Roberts, "Opening Doors for More First Home Buyers", [media release], 21 June 2022.