Major changes to Western Australia’s tax laws are due to come in soon. Mark Beyer investigates some of the issues surrounding these.
BUSINESS and property groups are seeking an 11th hour review of planned changes to stamp duty payment arrangements.
The Chamber of Commerce and Industry, the Real Estate Institute of Western Australia and the Housing Industry Association have all written to the WA Government seeking to halt or amend the changes.
Under the planned change, due to take effect from July 1, the period for lodgment and payment of stamp duty would be cut from 180 days to 90 days.
“The chamber is concerned that the Government has not sufficiently considered the consequences this change will have on commercial transactions involving long settlement periods, particularly those relating to business acquisitions and property developments,” CCI deputy chief executive Ross McLean said.
Mr McLean said commercial transactions were more complex than residential property transfers and warranted longer periods before settlement.
“By reducing the lodgment and payment timeframe, higher costs will be imposed on property developers, potential business owners and their conveyance agents.”
Mr McLean said the Office of State Revenue was also likely to incur higher administrative costs because it would have to refund stamp duty on transactions that do not proceed to settlement.
Graham O’Hehir, managing director of WA’s largest business broking agency Goodwin Mitchell O’Hehir, said more than 30 per cent of businesses placed ‘under offer’ do not eventually settle.
Even when transactions do proceed to settlement, the changes would result in business purchasers paying stamp duty well before transactions were due to settle.
The CCI has requested that the current lodgment and payment period of 180 days be retained for business acquisitions and property developments. Alternatively, it has asked that the Office of State Revenue align payment times with expected settlement dates rather than the date that sale contracts were executed.
Housing Industry Association executive director John Dastlik said his members were particularly concerned about the impact on low-income first home buyers. He said many first home buyers bought a block of land and then signed up with a builder and entered a savings plan before proceeding to build their home.
The accelerated payment of stamp duty, as well as the planned 15 per cent increase in the rate of stamp duty on conveyances, would hit this group particularly hard, Mr Dastlik said.
He claimed the Government could be adversely affected by these changes, since government land sales may decline and demand for public housing may increase.
The HIA has proposed that people buying land worth up to $100,000 should be exempted from the accelerated lodgment and payment arrangements.
REIWA public affairs director Lino Iacomella said his group had written to Commissioner of State Revenue Bill Sullivan about the planned changes. REIWA has not proposed specific changes.
Mr Iacomella echoed Mr Dastlik’s concern about the cumulative effect of accelerated stamp duty payments and higher rates of stamp duty.
“First home buyers will be hit very hard by the latest and harsh increase in stamp duty.
“They are least able to afford an increase. All other States have greater concessions for first home buyers.”
As part of the business tax reform package, which is expected to proceed through parliament this week, the threshold for the $500 conveyance duty rebate for first home buyers was to be increased from $135,000 to $185,000 for established homes and from $52,000 to $72,000 for vacant land.
