In brief
The State budget for NSW was delivered on 22 June 2021 ("NSW Budget"). The NSW Budget allows for stamp duty exemptions for electric vehicles and a new road user charge. The NSW Government has also released before the budget a progress report on its proposal for a future property tax to eventually replace stamp duty and land tax over a period of years.
Summary
- A new road user charge will be levied on zero and low emissions vehicles from 1 July 2027 or earlier at a rate of 2.5 cents per kilometre (in 2021- 22 dollars).
- Battery electric and hydrogen fuel cell vehicles costing less than $78,000 will be exempt from vehicle duty from 1 September 2021.
- A proposed new property tax to eventually replace stamp duty and land tax remains under consideration and further consultation.
Property tax proposal
In 2020, the NSW Government released a Consultation Paper setting out its proposals for a new property tax, effectively to replace stamp duty and land tax over a period of time. Following consultations, NSW has issued a progress paper for June 2021 ("Progress Paper") setting out a summary of the conclusions it has made following consultation.
Overview
- The basic proposal for replacing stamp duty and land tax put forward last year remains under consideration.
- If the proposal proceeds, buyers will have a right to elect whether to pay duty or property tax but once an election is made for property tax, the land in question will remain subject to the property tax with no further rights of election.
- Certain exemptions will be allowed, for example for where there are existing stamp duty and land tax exemptions and the property has not opted into the property tax. Exemptions will also apply for certain primary production land.
- Foreign investors will remain liable for surcharge duty and land tax in addition to having to pay property tax.
- Tenant protection measures may result in landlords in some cases absorbing the cost of the property tax.
- A further period of feedback will run until 30 July 2021.
Outline of proposal
- The proposal in summary contemplates the replacement after a period of time, perhaps 20 years or longer, of stamp duty and land tax with a single property tax. The new property tax is intended to apply at differential rates, depending on the kind of property that is taxed. The proposed table of rates is as follows:
