The state's supply of land for home development is expected to smooth out after the government said it will reintroduce a land tax concession in next month's state budget.
The state's supply of land for home development is expected to smooth out after the government said it will reintroduce a land tax concession in next month's state budget.
The concession will allow developers to pay land taxes on the lower undeveloped value of land holdings, rather than the more costly subdivided value of land, for one year after the creation of the lots.
Currently, the land tax is charged on June 30 on any titled lots that developers are holding at that time.
Treasurer Troy Buswell said the pre-budget announcement will give developers more time to proceed with subdivisions which might otherwise be delayed until after June 30 2009.
"Each year, we see a decline in lot creation in the lead-up to the assessment of land tax on June 30, only to rebound through July and August," Mr Buswell said.
"The reintroduction of the concession will help remove this distortion as developers will no longer need to wind down their holdings of subdivided land around June 30 in order to minimise land tax.
"This will contribute to a smoother pattern of lot creation by the industry and should also assist in reducing any bottlenecks in the approval process for relevant State Government agencies and local government."
He said the the estimated land tax revenue foregone is about $2 million per annum.
Urban Development Institute of WA chief executive Debra Goostrey has welcomed the tax reintroduction, which was abolished in 2003.
"It's an extremely welcome move and given the first home buyer grant runs out on 30th of June, we want to ensure that as much stock as possible is available to the consumer," Ms Goostrey told WA Business News.
She added that the tax concession will also help the state government's 3 per cent efficiency drive in that employees will have a steady stream of work.
Mr Buswell said the move will support Western Australian jobs as it created a more consistent stream of work for civil contractors.
The announcement is below:
Treasurer Troy Buswell today foreshadowed the announcement of a land tax concession aimed at reducing property market volatility and bottlenecks in the approvals process, as part of the 2009-10 State Budget.
The concession would allow developers to pay land tax and Metropolitan Region Improvement Tax on the lower undeveloped (or 'englobo') value of land holdings, rather than the full subdivided value of lots, for one year after the creation of the lots.
Speaking at an event, the Treasurer said the reintroduction of the concession, which was introduced by the Court Government in 1996 and abolished by Labor in 2003, would provide benefits for both developers and home buyers.
"Each year, we see a decline in lot creation in the lead-up to the assessment of land tax on June 30, only to rebound through July and August," Mr Buswell said.
"The reintroduction of the concession will help remove this distortion as developers will no longer need to wind down their holdings of subdivided land around June 30 in order to minimise land tax.
"This will contribute to a smoother pattern of lot creation by the industry and should also assist in reducing any bottlenecks in the approval process for relevant State Government agencies and local government.
"This move also provides support for Western Australian jobs because it creates a steadier, more consistent stream of work for civil contractors."
The Treasurer said the pre-Budget announcement would give developers more time to proceed with subdivisions which might otherwise be delayed until after June 30, 2009.
"This would help ease any temporary shortage of lots that may arise from first home owners seeking to lock-in purchases of land ahead of the scheduled cessation of the Federal Government's first home owners grant scheme on June 30, 2009," he said.
Mr Buswell confirmed he had written to the Federal Treasurer earlier this month to give formal support for an extension of this scheme beyond this financial year
The estimated land tax revenue foregone is about $2million per annum.
