Victorian State Budget 2021 - 2022 announcements

Lowe Lippmann Chartered Accountants

Victorian State Budget 2021-22 announcements

The Victorian Government delivered the 2021-22 State Budget on Thursday 20 May 2021.   While the full details have yet to be released, we can provide the following summary of the relevant state tax measures which have been announced.


Payroll tax

  • A new " mental health levy " will be imposed on businesses with more than $10 million in national wages, to help fund Victoria's mental health system.   Big businesses will pay the levy through payroll tax for their Victorian employees, by imposing a payroll tax surcharge of 0.5 per cent, plus a further 0.5 per cent levy applied to every dollar in wages spent above $100 million.   Legislation to ensure the levy only funds mental health services will need to pass Parliament.
  • The payroll tax - free threshold will be increased to $700,000 from 1 July 2021, bringing forward this tax cut forward by 12 months for approx. 42,000 businesses across the state.
  • The regional employer payroll tax rate will also be reduced from 2.02 per cent to 1.2125 per cent from 1 July 2021, further reducing payroll tax for approx. 4,000 regional businesses.

Land Tax

  • Owners of taxable land holdings valued at less than $300,000 will no longer pay land tax, with the tax-free threshold for general land tax rates to increase from $250,000 to $300,000 from 1 January 2022.
  • Owners of taxable land holdings valued between $1.8 million and $3 million will be imposed with a land tax increase of 0.25 per cent (from 1.30 per cent to 1.55 per cent).
  • Owners of taxable land holdings valued more than $3 million will also be imposed with a land tax increase of 0.30 per cent (from 2.25 per cent to 2.55 per cent).

 

We note the Victorian "land tax year" is assessed on a calendar year basis, based on land owned at midnight on 31 December before a land tax assessment is issued.   In other words, the land owned at midnight on 31 December 2021 is used to calculate land tax in the 2022 land tax year.


Stamp Duty

  • On homes worth $2 million or more, transferred after 1 July 2021, the stamp duty rate will be increased by 1 per cent (up to 6.5 per cent).   Currently, stamp duty is a maximum of 5.5 per cent for properties worth more than $960,000.
  • Many first home buyers will now pay less stamp duty when buying off the plan (that is, purchasing a property before the build has been finished) with a stamp duty concession to temporarily increasing the land value threshold to $1 million.   The increased threshold will apply to contracts entered into from 1 July 2021 to 30 June 2023.
  • For new residential properties worth up to $1 million, that have been on the market for less than 12 months, a new 50 per cent concession will apply to contracts entered into from 1 July 2021 to 30 June 2022.
  • Victorians buying new residential property worth up to $1 million in greater Melbourne will get a concession of up to 100 per cent on stamp duty if the property has been unsold for more than 12 months.   This measure is expected to apply from Friday 21 May 2021.

We consider this suite of measures should provide some Melbourne property developers with stamp duty waivers and concessions that should make it easier to sell unsold apartments, as well as new stock, and hopefully clear any vacant inventory.


Other Measures

  • Developers and speculators who profit from Government planning decisions (made from 1 July 2022) to rezone ex-industrial land or farmland, used to create new residential properties, will face a windfall gains tax of up to 50 per cent for windfalls above $500,000.   The windfall gains tax will be phasing in for gains of more than $100,000.
  • From 1 January 2022, private gender-exclusive clubs will no longer receive the land tax concession reserved for charities, clubs and associations.   This would bring it into line with other private organisations liable to pay land tax on their landholdings.

 


We note that full details of these announcements will be released as the Victorian Government progresses with the necessary legislation and regulations.

 

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

November 4, 2026
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