On 14 December the Treasurer released the 2017-2018 Half Yearly Review showing that the NSW Government was set to deliver a budget surplus of $3.3b in 2017-2018.
A summary of the review in relation to state taxes are:
- Taxation revenue is estimated to be $149m lower than the budget estimate. This is partly due to the lower forecast transfer duty as growing numbers of first homebuyers benefit from new concessions, but with expected higher payroll tax and land tax collections partly off-setting the reduction.
- Stamp duty policy changes announced in the budget (Housing Affordability package; increase in foreign purchaser duty to 8%), have changed the mix of transactions between first homebuyers, domestic investors and foreign investors, resulting in overall lower transfer duty revenue. As a result, transfer duty revenue is forecast to be $657m lower over the estimates.
- Land tax revenue in 2017-2018 is expected to be $105.9m higher than at the budget as a result of new land valuations determined by the valuer general as at 1 July 2017.
This may result in an increase in taxpayers being unsatisfied with their valuations and land tax assessments and seeking to object to land valuations and/or restructure land holdings.
- Payroll tax revenue in 2017-2018 is expected to also be higher than estimated, by $189.5m, as a result of strong NSW employment and wage growth.
- Given the significant reduction in transfer duty revenue and the Government’s focus on land tax and payroll tax revenue, the NSW Revenue may increase surveillance activity in relation to land tax and payroll tax compliance, for example land tax exemptions and payroll tax grouping.
Clients should be reminded to keep accurate and supporting evidence of their taxation positions.
If you have any queries in relation to the above or how it may impact your clients, please do not hesitate to contact us.