The Budget Measures Bill 2017 (SA) was passed by the SA House of Assembly on 10 August 2017 with 10 Government amendments and now moves to the Legislative Council.
The amendments concern the foreign ownership surcharge.
- Where a resident person or trust acquires an interest in land only to later become a foreign person or trust within 3 years of that land acquisition, a foreign ownership surcharge will become payable on the original land acquisition.
- Another amendment seeks to ensure that a foreign ownership surcharge is only applied to the interest held by the foreign members of a group or associates and is not charged on the interest held by other group members.
- Complementary amendments are made as a consequence of the above amendments.
The Bill as introduced seeks to implement various SA 2017-18 Budget measures including:
- Introduce a major bank levy from 1 July 2017. The levy will apply to all authorised deposit-taking institutions (ADIs) that offer services in South Australia and are liable for the Commonwealth Government major bank levy. The amount payable under the State levy will be 0.015% of South Australia’s estimated share of the total value of bank liabilities subject to the Commonwealth major bank levy at the end of each quarter.
- Introduce a tiered payroll tax rate structure from 1 July 2017 – (a) the payroll tax rate applying to annual Australian taxable payrolls of between $600,000 and $1 million will be lowered from 4.95% to 2.5%. (b) The rate will then phase up from 2.5% to 4.95% for businesses with annual Australian taxable payrolls of between $1 million and $1.5 million. (c) Australian taxable wages above $1.5 million will incur a flat 4.95% rate.
- The Bill proposes to amend the Payroll Tax Act 2009 to reinstate the policy intent on the introduction of the owner-driver exemption within the contractor provisions prior to the adverse decision in the NSW Supreme Court in the decision of Smith’s Snackfood Company Limited v Chief Comr of State Revenue(NSW)  NSWSC 998. In that matter, the Court concluded that the owner-driver exemption provision can be apportioned into taxable and non-taxable services. The contractor provisions were not intended to apply to allow services provided under a contract to be apportioned between exempt and taxable services. They are intended to operate on the basis that the contract is either fully exempt because it falls within the relevant exemption or is taxable because it does not fall within the relevant exemption.
- The Bill would amend the Payroll Tax Act 2009 to reflect changes to income tax legislation relating to the exempt rate for motor vehicle allowances – to reflect changes in Federal Law. The amendments reflect the fact that the ATO now allows for the use of a standard rate for all motor vehicles, which is 66 cents per kilometre for the 2016-17 income year, rather than being based on the car’s engine size. These amendments will take effect from 1 July 2016 to coincide with the change at the Federal level.
- Provide for land to be exempt from land tax for 5 years where that land was subject to an off-the-plan stamp duty concession granted with respect to a contract entered into between 22 June 2017 and 30 June 2018. If the land is on-sold by the recipient of the off-the-plan stamp duty concession during the 5-year exemption period, the land tax exemption will not transfer to the purchaser of the land. This, in effect is a 5 year claw-back of the concession if the purchaser sells within 5 years.
- The Bill would amend the Stamp Duties Act 1923 to introduce a foreign ownership surcharge on the conveyance or transfer of an interest in residential property to a foreign person, corporation or trust, executed on or after 1 January 2018 (including land holder acquisitions). The surcharge will be set at a rate of 4% of the dutiable value conveyed but will only be payable with respect to the extent of the interest in the residential property. The surcharge will be in addition to the normal stamp duty that is payable.
- The off-the-plan stamp duty concession extended for 12 months, but … – the concessions is scheduled to expire on 30 June 2017. (a) The Bill extends the concession for a further 12 months to 30 June 2018. (b) The eligibility criteria for the concession will also be amended to exclude foreign purchasers from being eligible to receive the concession. This revised eligibility criteria will take effect from 22 June 2017. (c) The definition of a foreign purchaser will be identical to the definition that will apply for the purposes of the foreign ownership surcharge.