The Victorian government has introduced a new tax system for commercial and industrial properties called the Commercial and Industrial Property Tax (CIPT).
Instead of paying stamp duty upfront when buying these properties, owners will pay a yearly CIPT starting from July 1, 2024. The tax will be 1% of the land’s value, except for build-to-rent properties, which will pay only 0.5%. This change aims to encourage investment by removing the big initial stamp duty cost.
Here are the other noteworthy budget updates for retailers in 2024:
- The COVID Debt Levy Payroll, an extension until 2033, will impose an additional 0.5% payroll tax on businesses with turnover exceeding $10 million, and a 1.0% tax on those exceeding $100 million.
- Small businesses will witness a boost in the payroll tax-free threshold, escalating from $700k to $900k, effective this year.
- Larger businesses will undergo the phased elimination of the payroll tax-free threshold, as previously outlined.
- Families with children enrolled in Government schools will receive a one-time $400 allocation for uniforms and extracurricular activities per child.
- The Victorian Government’s Sick Pay Guarantee for casual workers will be terminated.
- Over a decade, business insurance duty will be gradually phased out.
Australia’s peak retail body, the Australian Retailers Association, has welcomed measures to support families and small businesses in the Victorian Budget, but warned that mounting taxes and levies on large retailers may have an economic ripple that impacts all Australians.
ARA CEO Paul Zahra said the Budget is a mixed bag for retailers economically. “The consumer spending slowdown, coupled with increased costs of doing business, is pushing many retailers to crisis point. We welcome the measures that will alleviate costs and provide some cost-of-living relief,” Mr Zahra said. “However, unfortunately several of the changes announced in this year’s budget will only exacerbate the challenges for retailers.”
Mr Zahra said he was pleased the Government will retain the increase to payroll the tax-free threshold to $900k for small businesses. “This is especially valuable for new small businesses, to have a wider net of tax relief while they’re first getting off the ground,” said Mr Zahra. “We’re also pleased to see business insurance duty will be phased out over the next decade, reducing costs by more than $500 million in the first four years.
“Whilst the replacement of commercial stamp duty will save retailers in the short term, unfortunately over the long term it will prove much more costly. In addition, the COVID Debt Repayment Plan and phasing out of the tax-free threshold for larger businesses will put a significant handbrake on growth and could potentially result in increased prices or reduced staff.”
Mr Zahra said the Sick Pay Guarantee, whilst somewhat confusing in its structure, was a welcome initiative for workers who were unwell during the pandemic. “Moving forward, it makes sense to retire the Sick Pay Guarantee program considering casuals already receive a loading paid by employers to cover sick leave and holiday pay,” he said. Mr Zahra said the Budget ultimately could have delivered far more to address current economic challenges. It is disappointing that the Budget has done little to relieve the cost of doing business crunch and improve consumer confidence – this is something the retail industry was desperate to see.”
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