1C FROM THE OFFICE OF THE TREASURER
Tuesday, 6 May 2008
$1.43 BILLION RELIEF FOR HOME BUYERS AND BUSINESS
Victoria’s first home buyers are big winners from the Budget with the Brumby Labor Government offering first home buyers a stamp duty cut of almost 17 per cent – worth $2460 on the median first home – on top of existing first home buyers’ assistance worth up to $12,000.
Treasurer John Lenders said this meant that from today, for the first time, first home buyers will now be eligible for the lower rate of stamp duty as well as the First Home Bonus.
And for the first time, an additional $3000 bonus will be available to first home buyers buying a new home in regional Victoria.
“The Brumby Labor Government understands the pressures Victorian families face, particularly those starting out. That is why our Government is managing the economy in the interests of working families,” Mr Lenders said.
“Central to this is putting home ownership in reach of more Victorians. The tax cuts the Brumby Labor Government is announcing today will reduce the cost of first homes for Victorian families.”
Mr Lenders said Victorian families and businesses would share in $1.43 billion worth of tax cuts and reduced business costs, which will create new jobs and make homes more affordable across the State.
The new tax cuts include a $422 million stamp duty cut, a $490 million land tax cut and a payroll tax cut of $170 million.
WorkCover premiums have also been cut by $352 million over the next four years, delivering savings to Victoria’s businesses.
“The Brumby Labor Government is delivering a long term economic plan for the future of all Victorians,” Mr Lenders said.
“This is the biggest tax package in a decade and will help drive jobs, home ownership and business growth in Victoria.
“The Brumby Labor Government’s disciplined financial management means we can take some pressure off families by cutting tax, driving new jobs and building strong, liveable communities across the State.
“The Brumby Labor Government’s $1.43 billion worth of tax cuts and reduced business costs shows again how our Government is managing the economy and driving jobs in the interests of working families.”
Stamp Duty
Victorians buying their first home will be eligible for the lower principal place of residence stamp duty rates on top of the First Home Bonus for the first time.
Table 1: Cuts for First Home Buyers
Purchase price |
Previous Duty Payable |
New Duty Payable |
Savings ($) |
Savings (%) |
$200,000 |
$7,660 |
$6,370 |
$1,290 |
17% |
$300,000 |
$13,660 |
$11,370 |
$2,290 |
17% |
Median first home $317,000 |
$14,680 |
$12,220 |
$2,460 |
17% |
$400,000 |
$19,660 |
$16,370 |
$3290 |
17% |
$500,000 |
$25,660 |
$21,970 |
$3690 |
14% |
Changes to the tax brackets for stamp duty will provide financial assistance to families, businesses and investors buying property across Victoria by cutting $422 million worth of stamp duties over the next four years.
There will continue to be two tax scales – one for principal places of residence and another for commercial or investment properties – and both will have the tax thresholds lifted by 10 per cent to reduce the tax burden on home ownership.
“For a first home buyer this represents a saving of 17 per cent, as there will be a $2460 saving on the median first home in Melbourne worth $317,000,” Mr Lenders said.
Mr Lenders said this was the first major overhaul of stamp duty brackets in 10 years and reflected the Brumby Labor Government’s commitment to making homes more affordable for families.
“The Brumby Labor Government believes that Victorian families should have the opportunity to own their own home,” Mr Lenders said.
Mr Lenders said the threshold for Victoria’s unique stamp duty exemption for pensioners and concession card holders would also be increased by 10 per cent to make home ownership more affordable for needy Victorians and help senior Victorians wishing to downsize their homes.
This means that a Victorian pensioner could buy a home up to $330,000 and pay no stamp duty. Those purchasing a property worth between $330,000 and $440,000 would receive a discount.
This initiative is expected to save Victorian pensioners $26 million over the next four years.
He said the stamp duty changes applied to contracts entered into on or after Budget day.
Table 2: Duty on land transfers
Land transfer duty rates for principal place of residence purchases, including for the first time first home buyers | |
Value of property transferred |
Duty payable |
Up to $25 000 |
1.4% of the value of the property |
$25 001 - $130 000 |
$350 plus 2.4% of the value in excess of $25 000 |
$130 001 - $440 000 |
$2 870 plus 5% of the value in excess of $130 000 |
$440 001 - $550 000 |
$18 370 plus 6% of the value in excess of $440 000 |
$550 001 - $960 000 |
$28 070 plus 6% of the value in excess of $550 000 |
$960 001 and over |
5.5% of the value of the property |
General land transfer duty rates | |
Value of property transferred |
Duty payable |
Up to $25 000 |
1.4% of the value of the property |
$25 001 - $130 000 |
$350 plus 2.4% of the value in excess of $25 000 |
$130 001 - $960 000 |
$2 870 plus 6% of the value in excess of $130 000 |
$960 001 and over |
5.5% of the value of the property |
First Home Bonus for Regional Victorians
As part of the 2008-09 State Budget the Brumby Labor Government is introducing an additional First Home Bonus for regional Victorians worth $3 million.
An additional $3000 will be available to first home buyers who buy newly constructed homes in regional Victoria until 30 June 2009.
This is on top of the Victorian Government funded $7000 First Home Owners Grant and the $5000 First Home Bonus for newly constructed homes.
“Because of our Government’s investment since 1999, Victoria’s booming regions are among the most liveable places in the world, and many young families are considering moving to our great provincial cities and towns,” Mr Lenders said.
“This additional $3000 grant for first home buyers in regional Victoria means they will be eligible to receive up to $15,000 worth of Government assistance to buy a new home, making living in regional Victoria even more attractive.
“The Brumby Labor Government is committed to growing Victoria’s regions and this grant will encourage young families to stay in or move to regional Victoria. This comes on top of Victoria’s concessions for house and land purchases off the plan.
“This new $3000 regional Victoria first home buyers grant will not only open up home ownership to more Victorians and help grow our regions, it will also support the construction of new homes, creating jobs in the local building industry.”
Mr Lenders said the additional bonus applied to properties in rural and regional Victoria.
Land Tax
All land tax payers in Victoria will benefit from a reduction in the top land tax rate and changes to land tax thresholds for land tax payments from the start of 2009.
The top land tax rate will be reduced by 10 per cent from 2.5 to 2.25 per cent. This is down from 5 per cent in 1999 and will help make Victoria a more competitive place to do business.
In addition, land tax thresholds will increase by around 10 per cent to relieve the pressure on land owners.
As a result of these changes, all Victorian businesses with land holdings valued between $400,000 and $5.7 million will pay less land tax than they would in New South Wales and Queensland.
“These land tax cuts are worth $490 million and show the Brumby Labor Government’s prudent financial management is ensuring that Victoria is the best place to live, work and invest,” Mr Lenders said.
“We are providing a more competitive business environment to drive jobs and economic growth in Victoria.”
This $490 million land tax cut over the next four years brings the total amount of land tax cuts since this Government came to office in 1999 to $3 billion.
Also in this year’s State Budget the Government has extended land tax exemptions to include facilities which provide services to young Victorians with disabilities.
Table 3: Land Tax
Land Value |
NSW |
QLD (Companies) |
VIC – Current |
VIC – New |
Savings ($) |
Savings (%) |
$225 000 |
$0 |
$0 |
$250 |
$0 |
$250 |
100% |
$500 000 |
$2 468 |
$4 500 |
$800 |
$775 |
$25 |
3% |
$1 million |
$10 468 |
$12 375 |
$3 480 |
$2 975 |
$505 |
15% |
$2 million |
$26 468 |
$30 000 |
$13 380 |
$11 975 |
$1 405 |
11% |
$3 million |
$42 468 |
$45 000 |
$29 980 |
$24 975 |
$5 005 |
17% |
$4 million |
$58 468 |
$60 000 |
$54 980 |
$47 475 |
$7 505 |
14% |
Payroll Tax
Victoria’s payroll tax rate will fall to under 5 per cent and will be at the lowest level in 34 years.
“This $170 million payroll tax cut will deliver additional tax relief to over 28,000 Victorian businesses across the state,” Mr Lenders said.
The already scheduled cut from 5.05 per cent to 5 per cent on 1 July 2008 will now drop even further to 4.95 per cent
This brings the total value of payroll tax cuts announced by our Government to almost $1.2 billion since coming to office in 1999, taking the payroll tax rate from 5.75 per cent in 1999 to 4.95 per cent next financial year.
“The Brumby Labor Government is committed to providing the most competitive business environment possible in Victoria to boost investment and drive jobs,” Mr Lenders said.
“From 1 July businesses with a payroll between $4 million and $13.5 million will pay the lowest payroll tax in Australia.”
Workcover
Victoria’s WorkCover premiums have been cut for the fifth year in a row setting a historic low rate of 1.387 per cent of an employer’s payroll – the second lowest in Australia.
“Next financial year Victoria’s businesses will pay the lowest WorkCover premiums in the State’s history,” Mr Lenders said.
Mr Lenders said this year’s 5 per cent reduction in average WorkCover premiums, would deliver savings of $352 million over the next four years to Victoria’s businesses.
