The New South Wales Treasurer presented the 2024-25 State Budget on 18 June 2024.
The budget introduces significant changes to property taxes while providing some relief for payroll tax for medical practices.
Payroll Tax Rebate for Medical Practices
The application of payroll tax to arrangements commonly entered into between medical centre operators and medical practitioners has been a contentious issue for several years, with Revenue NSW confirming that payroll tax applies through a ruling last year.
To lessen the impact of payroll tax on the cost of delivering medical services, the NSW Government has introduced a payroll tax rebate for medical practices that meet specific bulk-billing thresholds. Starting from 4 September 2024, GP practices that bulk bill at least 80% of patients in Sydney metropolitan areas and 70% in regional areas will benefit from a payroll tax rebate.
Additionally, past unpaid payroll tax liabilities for payments made to GP contractors will be exempted up to 4 September 2024. While this will be a welcome relief, it is also inequitable, as GP practices that have already paid payroll tax will not receive refunds.
Further, the rebate and the exemption apply only to GP practices and do not extend to medical services generally (such as dentists) or allied health practitioners.
Increased Foreign Investor Surcharges
From 1 January 2025, the foreign purchaser surcharge duty will increase from 8% to 9%, and the surcharge land tax from 4% to 5%. The foreign purchaser surcharge duty applies to the purchase of a property.
New South Wales now has the highest foreign investor surcharges in Australia.
Freezing Land Tax Threshold Indexation
The budget freezes the annual indexation of land tax thresholds, fixing the general threshold at their 2024 land tax value of $1,075,000 and the premium rate at $6,571,000. This is expected to generate an additional $1.5 billion over four years.
This measure will increase the land tax burden for existing taxpayers and bring more landowners into the tax net.
Enhanced Compliance Measures
Additional funding will be allocated to Revenue NSW to enhance land tax compliance, increase revenue, and reduce tax avoidance. This is projected to increase revenue by $51 million in 2024-25 and $61 million in 2025-26. We would expect Revenue NSW to target trusts with non-resident beneficiaries or that do not exclude non-resident beneficiaries, and trusts that do not meet the strict requirements of a fixed trust.
If you would like to learn more about the 2024-25 NSW State Budget, please contact Calibre Business Advisory on (02) 9261 2177. Our dedicated team will be more than happy to assist.