The 2023-24 State Budget was delivered on Tuesday 23 May 2023.
The full Budget papers are split into five sections and are supported by Budget Information Papers available from https://www.dtf.vic.gov.au/state-budget/2023-24-state-budget.
Pertinent highlights including those that may have potential implications for your business and or personal finances are set out below.
Key Highlights
The government has resolved to reduce its record debt accumulated during the height of COVID, while funding its election promises.
The governments COVID Debt repayment plan contains three elements:
1) Budget savings, including reducing the public service towards pre-pandemic levels;
2) Introduction of a temporary COVID Debt Levy comprising:
- Larger business with national payrolls above $10 million a year to pay additional payroll tax. A rate of 0.5% will apply for businesses with a national payroll above $10 million and businesses with a national payroll above $100 million will pay 1%. The additional rates will be paid on the Victorian share of wages above the relevant threshold and are estimated to raise $3.9 billion.
- Lowering the land tax threshold and adding a modest fixed charge with larger landholdings also paying an extra 0.1 per cent of land value. Family homes will not be affected.
- From January 2024, Victorians who currently pay land tax will be hit with an additional annual fee of $500 for landholdings worth between $50,000 and $100,000 and $975 for land worth between $100,000 and $300,000. For land worth more than $300,000, the $975 fee plus an additional hike of 0.1% will be charged. Family homes will remain exempt from land tax.
3) Using the Victorian Future Fund to help manage the COVID debt over the next ten years.
The COVID Debt Levy will raise $8.6 billion in COVID debt offsets over four years. It will end in 2033.
Big businesses will taxed further to help repay the state’s debt, however the government has also introduced some relief, including abolishing business insurance duty and shielding more from payroll tax. The payroll tax free threshold will be lifted from $700,000 to $900,000 from 1 July 2024, with a further increase to $1 million from 1 July 2025.
Transitioning away from stamp duty in favour of an annual tax for commercial and industrial land. Properties that transact after 1 July 2024 will have the option to pay duty as an upfront lump sum or in 10 equal instalments over 10 years (with interest). From year 11, an annual property tax of 1% of the unimproved land value will apply.
The land tax exemption for principal places of residence under construction or renovation will be extended by a further two years if the builder goes into liquidation.
The government will overhaul early childhood education and care with funding for its free kindergarten program and a commitment to build government owned centres around Metropolitan Melbourne.
The budget provides a further $4.9 billion to the healthcare sector including funding extra nurses and upgrading several major hospitals. Further funding will also be provided to cater for women’s health.
The government will also spend $1 billion to revitalise the state-owned State Electricity Commission to boost jobs in renewable energy, as promised in Labor’s election campaign.
Any measures noted have to be approved by parliament prior to commencement. Therefore, you should only rely on the exact detail of the changes once legislation is passed.