New South Wales has announced plans to do away with stamp duty in an effort to drive post-COVID recovery.
NSW Treasurer Dominic Perrottet said in his budget speech the government was launching a proposal to give home-buyers the choice to axe stamp duty in favour of a land tax.
"Today we turn theory into the first firm step, seeking feedback on a proposal to transform our property tax system," Mr Perottet said.
"This proposed model would give buyers a choice to axe stamp duty at the point of purchase and choose an annual property charge instead.
"There would be no impact unless you are purchasing a property and you make the choice to change."
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Mr Perottet said the proposal could generate 75,000 new jobs and add an extra $3,300 of income for every household in NSW.
An annual property tax based off land value would replace stamp duty, and buyers will get the choice of paying the transfer duty or the property tax, with rates differing for owner-occupiers and investors.
Current stamp duty concessions for first-home buyers would be replaced with a $25,000 grant, with the option to use the money on refurbishing the property.
"Stamp duty is a relic from a bygone era when you picked one career, started a family, bought a home and basically settled in for life," Mr Perrottet said.
"It adds tens of thousands of dollars to the cost of the biggest financial commitment most people ever make."
Buying a house in Sydney at the median price of $1,154,406 would cost you $48,795 in stamp duty.
Stamp duty comes under the umbrella of transfer duty, a state government tax, which the NSW government forecasted will make them 7.926 billion in revenue in 2020/21.
NSW also announced in July first-home buyers would see thresholds raised for stamp duty, from $650,000 to $800,000 for new homes, and from $350,000 to $400,000 for vacant land.
$29 billion to ensure economic recovery
In addition to stamp duty changes, Mr Perrottet announced sweeping changes to payroll tax.
The threshold is set to be raised from $1 million to $1.2 million and the rate will be dropped to 4.85% for two years, while companies who create 30 new jobs in NSW will have payroll tax scrapped.
Smaller businesses will also receive $1,500 digital vouchers to put towards government fees and charges.
"These changes mean around 36,000 businesses will save on average $34,000 each year for the next two years – including 3,500 that will pay no tax at all," Mr Perrottet said.
"It's all about getting Government out of the way so businesses get on with business."
Unions NSW Secretary Mark Morey slammed the budget, and said Mr Perrottet was holding the state back through a misguided mix of iedology and loyalty to big business.
"While the Commonwealth tries to put money in the pocket of workers through tax cuts, Dominic Perrottet is picking their pocket with wage cuts before it can be spent," Mr Morey said.
“This is why the Budget papers forecast a sluggish return to jobs growth.
"Under the current misguided approach, it will be almost four years until pre-crisis employment levels return."
Mr Perrottet also announced the 'Out and About' scheme, where every adult in NSW will receive four $25 vouchers to spend at entertainment and cultural venues to kickstart economic recovery.
The vouchers are required to be used separately and in one transaction; two can be used at restaurants, cafes, and clubs, and the other two can be used at cultural centres, performing arts, cinemas, and amusement parks.
"In our time of need, we encourage anyone who can, to go out and enjoy the best our State has to offer, and support the businesses doing it tough," Mr Perrottet said.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
- If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
- Top tax tips for people with an SMSF
- Median value hits $1m in over 200 suburbs, pricing millennials out of housing
- Generational demand sees first home buyer lending hit record high
- What does booming US inflation mean for Australia?
- Are extended car warranties worth it?