New South Wales Mini-Budget

The NSW Treasurer, the Hon. Eric Roozendaal, released the 2008-09 New South Wales Mini-Budget on 11 November 2008. The Budget is aimed at securing the State's tax revenue base and the measures include deferring the abolition date for some of the State taxes that were shortly due to be abolished as well as increasing the rate of land tax in relation to premium properties.

Abolition of transfer duty on marketable securities and non-land business assets and mortgage duty

Duty on unquoted marketable securities was to be abolished from 1 January 2009, however due to the Budget, it is now to be scheduled for abolition on 1 July 2012.

Mortgage duty on business loans only (noting mortgage duty on residential loans and loans to acquire residential investment properties has already been abolished) was to be abolished on 1 July 2009 but will now be abolished from 1 July 2012.

Transfer duty on business assets other than land was to be abolished on 1 January 2011 but this has now been deferred to 1 July 2012.

Landholder duty

One of the Budget measures includes a proposal to change the taxation of land rich acquisitions from a "land rich" basis to a "landholder" basis, similar to that implemented in Western Australia from 1 July 2008. It is expected that these new measures will be effective from 1 July 2009.

Under the current land rich duty regime, a person becomes liable for land rich duty if the person is acquiring a significant interest in a private company, a private unit trust, or wholesale trust which directly, or indirectly, holds land and where more than 60 percent of the entity's property comprises land. The landholder regime proposed by the Budget will result in the removal of the 60 percent threshold so that the acquisition of a significant interest in any entity that owns land valued at above a certain amount (eg. under the Western Australia landholder regime, this amount is currently $2 million) will be subject to transfer duty and will be treated as if it was a direct purchase of land.

Nominal duties

From 1 January 2009, nominal duties will increase as follows:

• nominal duties currently levied at $2 will increase to $10;
• nominal duties currently charged at $10 will increase to $50; and
• duty on declarations of trust over cash or non-dutiable and unidentifiable property will increase from $200 to $500.

Land tax

On 1 January 2009, the rate of land tax will increase and a new premium land tax marginal rate of 2 percent will apply to taxpayers with total taxable landholdings above $2.25 million. Any landholding below this amount will continue to be subject to the 1.6 percent rate and will receive the 2009 tax free threshold of $368,000. The premium threshold will also be indexed, similar to the other land tax thresholds. The principal place of residence and rural property exemptions will remain.

Parking space levy

From 1 July 2009, the parking space levy will increase from:

• $950 to $2,000 per annum per off-street, non-residential parking space in the Sydney, North Sydney and Milsons Point business districts; and
• $470 to $710 per annum in the business areas of St Leonards, Chatswood, Parramatta and Bondi Junction.

Existing exemptions for retail, hotel, clubs, restaurants and medical centres that apply in certain areas will continue to apply.

Mineral Royalties

From 1 January 2009, mineral royalty rates will increase as follows:

• royalties payable for minerals extracted from open cut mining will increase from 7 percent to 8.2 percent;
• royalties payable for minerals extracted from underground mining will increase from 6 percent to 7.2 percent;
• royalties payable for minerals extracted from deep underground mining will increase from 5 percent to 6.2 percent.

Petrol subsidies

The Government is also reviewing the petrol subsidy currently provided to retailers and there is a likelihood that it may be removed.

Other measures

Other measures include a congestion levy which will be implemented by increasing the tolls for using the Sydney Harbour Bridge and Sydney Harbour Tunnel during peak times to $4.00. It will be $2.50 during off peak times.