Every year, 1 July brings a raft of tax and other regulatory changes in regards to our finances and for 2018, there is a focus on tax-related matters in the property market. At both a Federal level and in several states, changes will impact both buyers and sellers.
Nationwide Update: New GST Obligations
From 1 July 2018, buyers of new units, homes or blocks of residential land, will become responsible for paying the relevant GST, directly to the Australian Taxation Office. Prior to 1 July, payment of the GTS has been the responsibility of the property developer. This measure has been introduced to address the issue of non-payment of GST by a minority of developers, who avoided paying this and other taxes and debts through the ‘phoenixing’. A term describing when a person liquidates a company and avoids paying debts, only to ‘rise like a phoenix’ and start a new company in the same business.
For buyers who purchased affected properties prior to 1 July 2018 but with settlement after 1 July, there is a contingency plan in place. If impacted by this change, buyers are best advised to consult with their legal advisor to ensure they meet their obligations.
Super Property Changes
A number of changes also come into effect in regards to superannuation and property transactions.
From 1 July 2018, persons over the age of 65 will now be permitted to pay $300,000 of the proceeds resulting from the sale of their family home, into their superannuation account.
At the other end of the age scale, those who have been making voluntary contributions into their superannuation accounts for the purposed of saving for a deposit on their first home, will now have access to those funds after 1 July.
Multiple Changes in Queensland
Queensland property buyers, sellers and current owners will all face a raft of changes from 1 July 2018.
The Additional Foreign Acquirer Duty (AFAD) will rise from 3% to 7%. Essentially this a transfer tax which applies to foreign buyers – individuals, trusts and corporation – of property in Queensland.
A new land tax also comes into effect from 1 July, for property holdings in excess of $10 million. Absentee landholders, trusts and companies will be now be charged 2.5% land tax while individuals face a 2.25% tax.
Also adding to the cost of property ownership is the new $70 per tonne waste disposal levy.
For first home owners, the news is not good, with the First Home Owners’ Grant (Queensland) for new build homes, reduced to $15,000, ie a decrease of $5,000, from 1 July.
In regards to utility costs, authorities expect Queenslanders to see their electricity bills go down, but council rates, water and sewage rates on the rise. Council rates in Brisbane could rise by around 2.5%, Gold Coast and Cairns by 1.7%, Sunshine Coast by 3.5%, Moreton Bay area by 2.9% and Ipswich residents could see a rise of 3%.
Queensland Urban Utilities are expected to increase utility costs in Greater Brisbane by 2% and Unity Water increasing rates on the Sunshine Coast and Noosa by 0.6% and in Moreton Bay by 0.5%
Bulk water costs are also set to rise in South East Queensland.
NSW Changes
eConveyancing comes into effect in NSW from 1 July, replacing paper and manual processing of property transactions, with all transfers and caveats to be lodged electronically.
There will also be an increases in the Local Infrastructure Levy. Greenfield areas levy will now be $40,000 and infill areas which are not funded by the Local Infrastructure Growth Scheme will now be $30,000
Stamp Duty to End in SA
1 July sees some good news for the SA property market with the final phase of the abolition of commercial stamp duty coming into effect and the off-the-plan stamp duty concession ending on 30 June 2018.
ACT First Home Buyers Win
While the first home buyers grant in the ACT is abolished, buyers who earn less than $160,000 will be exempt from stamp duty on both new and existing homes.
Both the individual State government budgets and the Federal budget introduced many new changes to taxes and other charges and we direct you to our Articles and News for a detailed wrap on each of these.
If you have any questions or require assistance with any of the issues discussed, please don’t hesitate to call Peter Tobin 0438 001 809 for a confidential discussion.
