The EAC’s Intel series brings together the thoughts, opinions and experiences of our directors into resources that can help you — agents and business owners — improve your own processes, agencies and our industry.
In June, EAC Chairman, Greg Toner delivers a thought-provoking opinion piece challenging the NSW Government to review its approach to stamp duty.
What are your thoughts? Leave them below in the comments section.
Almost 20 years since the GST was introduced by the Howard Government, our State Government is still charging stamp duty on some properties for which GST is also being collected. In other words, they are having two bites at the cherry for taxing purposes.
Taking into account the rise in commercial and industrial property values since 1 July 2000, the increase in stamp duty collected is quite staggering.
The fact stamp duty is calculated on a total value which includes transfer price and GST, means the State Government is, in essence, charging a tax on a tax.
An example of this is the sale of a vacant commercial or industrial property when the vendor is registered for GST. The sale price exclusive of GST is $1,000,000, for which the stamp duty charge is $45,990. The difference between the exclusive GST price and the inclusive GST price is $5,500.00, which the State Government collects in extra duty.
When GST was introduced, all states agreed stamp duty would only be collected on the sale price exclusive of GST. Remember, the GST can be claimed back from the Commonwealth Government after settlement of sale.
The NSW Government, did not follow through on this undertaking and has continued to double charge the stamp duty amount. This has been attributable to both the Coalition and Labour Governments on a continuing basis.
There has been some attempt to alleviate this double dipping in the Margins Scheme but when the vast sums of taxes collected for stamp duty on commercial and industrial property are considered, surely it is time the NSW Government revisits this circumstance and attempts to abide by the original agreement made when GST was first introduced.
Greg Toner is the Chairmen of the EAC and a qualified valuer with Toner and Associates in Orange, NSW.