State Taxes update

1 June 2012 Northern Territory: 2012-13 Budget

Payroll Tax

The Northern Territory (NT) Budget for the 2012-13 financial year was delivered on 1 May 2012.

The Payroll Tax Act (NT) provides an exemption for up to 14 weeks of wages paid as maternity, adoption or paternity leave where certain conditions are met. The current wording of the provisions relating to the exemption is unclear in respect of the treatment of part-time employees.

In summary, a number of NT tax related measures and certain incentives were announced.

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Deferring the abolition of Stamp Duty on nonland business property (previously scheduled for 1 July 2012) until the Budget situation permits the cost of abolition.

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Amending the Payroll Tax Act (NT) to clarify that the exemption for wages paid to part-time employees as parental leave also extends to a period equivalent to 14 weeks at full pay.

The NT Budget announced that the Government has approved amendments to the Payroll Tax Act (NT) that will attempt to clarify that the exemption for wages paid to part-time employees as parental leave also extends to a period equivalent to 14 weeks leave at full pay. BuildBonus

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Continuing the BuildBonus initiative by providing eligible homebuyers with a one-off grant of $10,000. The grant may be available for homebuyers who build or purchase a new home up to the value of $600,000 where contracts are signed between 3 May 2011 and 30 June 2012 and construction commences after 3 May 2011.

The NT Budget has announced that the Government will continue the BuildBonus initiative by providing eligible homebuyers with a one-off grant of $10,000. The NT Budget 2012-2013 has allocated $2 million to the BuildBonus, effectively extending the operation of the scheme until 30 June 2012.

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Continuing to provide assistance to all NT homebuyers through stamp duty concessions and grants.

The grant may be available for homebuyers who build or purchase a new home up to the value of $600,000 where contracts are signed between 3 May 2011 and 30 June 2012 and construction commences after 3 May.

Stamp Duty The NT Budget announced that the abolition of stamp duty on non-land business property (including goodwill, licenses and intellectual property) has been deferred until the NT Budget situation permits the cost of that abolition. A review of the Budget’s capacity to accommodate the abolition of the stamp duty will occur annually. It is noted that the NT’s 2011-2012 Budget previously announced that stamp duty on non-land business property would be abolished from 1 July 2012. The NT’s decision to defer the abolition of stamp duty on non-land business property follows the Queensland approach. Queensland has decided to defer abolition until its own Budget situation permits the cost of that abolition. This is in contrast with South Australia and Western Australia which announced that they will only defer the abolition until 1 July 2013.

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Home Buyer Assistance The NT Budget has announced that it will continue to provide assistance to all NT homebuyers through stamp duty concessions and grants:

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first homebuyers receive a stamp duty exemption on the first $540,000 of the value of their home, resulting in a saving of up to $26,730

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principal place of residence stamp duty rebate of $3,500 for non-first homebuyers

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concession of $8,500 to assist senior Territorians and Pensioner and Carer Concession cardholders to downsize or buy a home, and

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a $7,000 grant to first homebuyers purchasing or building a new home up to the value of $750,000.

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Mining and Petroleum Royalties The NT Budget reports that mining and petroleum royalties are expected to decrease by $23.6 million in the 2012-2013 financial year. The revised earnings are based on advice from mining companies regarding lower profits-based royalties due to the value of the Australian dollar and lower commodity prices. Gambling Taxes Currently the NT has no power to control tax rates imposed on tickets sold in the NT for lotteries that are conducted in other States. The NT Budget announces that the Government has approved minor amendments to the Gaming Control Act (NT) that will:

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enable the Territory to impose taxes and fees on lottery operators who enter into an agreement with the Territory under the Gaming Control Act (NT)

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clarify and make consistent provisions relating to the payment of fees under the various licences and agreements under the Gaming Control Act (NT), and

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better integrate the taxation administration provisions of the Taxation Administration Act (NT) with the Gaming Control Act (NT) to ensure that the taxation arrangements proposed are efficiently administered.

The aim of the amendments is to facilitate further private sector investment and drive economic growth by allowing the NT to offer lottery agreements. For further information contact Stefan DeBellis on (07) 3257 8781. West Australia: 2012-13 Budget

share of total revenue attributable to royalty income, at 19 per cent, is up from 9 per cent in FY08.

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The State has a triple A credit rating.

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There is a projection of four consecutive Budget surpluses.

Stamp duty/Land Tax There are no significant stamp duty or land tax changes. Payroll tax 

A one-off small business rebate has been announced to offset the payroll tax cost to small and medium sized businesses in FY13. Small businesses with Australia-wide group payroll of up to $1.5 million in FY13 will receive a full rebate of their WA payroll tax liabilities, with a maximum value of $41,250. The rebate will gradually phase out for small businesses with payrolls between $1.5 million and $3 million. Payment of the one-off rebate will be made in the first half of the 2013-14 financial year after employers have completed the annual payroll reconciliation process. 

From 1 July 2012, payroll tax relief will be provided for the first two years of employment of employees with a disability or (subject to a cap on the size of the employer) new Indigenous employees under the following terms: 

All businesses will be exempt from payroll tax for the first two years for wages paid to new employees with a disability for whom they receive a Federal Government Disability Employment Services wage subsidy, or who are eligible for any form of support from the Western Australian Disability Services Commission.

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Businesses with annual payrolls of up to $15 million that hire new Indigenous employees for whom they receive the Federal Government's Indigenous Wage Subsidy will be eligible for a 100 per cent rebate on payroll tax on wages paid to these employees for the first two years. The rebate will be payable in arrears.

The West Australia (WA) Budget for the 2012-13 financial year (FY13) was delivered on 17 May 2012. Key points from the WA Budget include:

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WA economy is forecast to grow by 4.75 per cent in FY13.

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Projected operating surplus of $196 million in FY13.

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Projected growth in tax revenue of $783 million in FY13 relative to FY12 (and 11.3 per cent increase) reaching $7.7 billion in FY13.

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Goods and services tax (GST) revenue grants from the Commonwealth to decrease by 19.2 per cent or $662 million in FY13.

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The composition of State revenue has changed significantly in recent years. For example, the

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Other insights

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A $1 billion Western Australian Future Fund (Fund) will be established for future generations to benefit from finite mineral resources in WA. The $1 billion ‘seed capital’ will be transferred from the Royalties for Regions Fund. From the financial year commencing 1 July 2016 onwards, at least one per cent of the State’s annual royalty revenue will be paid into the Fund. The Fund’s annual balance and interest earnings will be quarantined from spending for 20 years. The Fund is estimated to be worth $4.7 billion in 20 years time. The Fund will allow future WA Governments to respond to emerging infrastructure requirements with a revenue reserve.

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As WA’s GST revenue in FY13 has been cut by $662 million relative to FY12, the WA Government will focus its attention on maintaining sustainable debt levels to fund infrastructure. For example, the WA Government has deferred $1.8 billion of capital expenditure to beyond 2015-2016.

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The WA Government has committed to undertake an analysis of WA royalty rates. This will include a three year consultation with affected industries. The analysis is designed to achieve a marginally improved return of revenue. The FY13 Budget includes a provision for additional revenue of $180 million in 2015-2016. Consideration of potential royalty rates for magnetite iron ore is not part of this process.

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The Budget includes $7.6 billion investment in infrastructure in FY13 and a total of $26.4 billion in the next four years.

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The royalty rate for iron ore ‘fines’ is to increase to 6.5 per cent from 1 July 2012 and to 7.5 per cent from 1 July 2013.

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Royalty Income: o

In FY13, royalty income is forecast to rise by $378 million (8.4 per cent) to $4.9 billion largely due to projected increase in iron ore royalties.

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Is expected to grow by an average rate of 10.4 per cent per annum over the outyears with the highest growth occurring in FY14 due to a predicted rise in iron ore volumes. The royalty income estimate in FY2016 also incorporates a provision for additional royalty income of $180 million from the Government’s commitment to undertake an analysis of existing royalty rates.

Victoria: 2012-13 Budget

In delivering the Budget the Treasurer acknowledged that Victoria faces substantial challenges as a result of global and national economic factors, which have resulted in a high Australian dollar, a large shift in investment patterns, falls in consumer and business confidence and significant reductions in Government revenue. Despite the falls in government revenue, the Victorian Government has decided not to introduce any new taxes or raise any existing taxes. Revenue measures The following is a summary of the more significant revenue measures announced:

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Abolition of stamp duty exemption for grants of Crown land - The stamp duty exemption for grants of Crown land will be removed from the Duties Act 2000 (Vic), to ensure that only genuine grants of Crown land remain exempt from stamp duty. This means that certain large commercially oriented leasing arrangements involving Crown land, which previously could benefit from the stamp duty exemption, will be brought to duty in line with other similar commercial transactions. Cut to WorkCover premiums - WorkCover premiums for Victorian employers will be cut by an average of three per cent from 1 July 2012. Fire Services Levy reform - Victoria is working towards reforming its insurance-based Fire Services Levy. Enhanced revenue compliance - This initiative will re-deploy Victorian State Revenue Office (SRO) staff to undertake increased monitoring and enforcement activities by the SRO from 1 July 2012 to improve taxpayer compliance.

Other points of interest 

State Revenue – The Government predicts a net operating surplus of $155 million in 2012-13, growing to $2.5 billion in 2015-16. It is expected that the growth in the surplus will be fuelled by expenditure constraints, rather than by increased taxation revenue. Notably, the Government has announced that it expects stamp duty revenue from land transfers to fall by $1.5 billion and Goods and Services Tax (GST) revenue to fall by $6.1 billion from previously projected revenues over the four-year budget period. This represents an average reduction of $1.9 billion a year, or around seven per cent of Victoria’s revenue from State taxes and the GST.

The Victoria Budget for the 2012-13 financial year was delivered on 1 May 2012 by the Victorian Treasurer.

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Expected Trends in Government Revenue - In 2012-13:       

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Land transfer duty is expected to grow by 4.9 per cent. Payroll tax is expected to grow by 3.4 per cent. Taxes on insurance are expected to be stable. Motor vehicle taxes are expected to increase by 13.8 per cent Land tax revenue is expected to grow by 11.9 per cent. Gambling taxes are expected to grow by 4.4 per cent. Revenue from GST is expected to grow by 6.3 per cent.

Infrastructure Spending - The total value of Victorian public sector capital projects underway in 2012-13, including projects across both the general Government and public non-financial corporation (PNFC) sectors and public private partnership (PPP) projects is expected to exceed $41 billion. The key infrastructure projects under development include:  the Regional Rail Link project, delivering dedicated regional tracks from West Werribee to Southern Cross Station, two new regional service platforms at Southern Cross Station, new stations at Wyndham Vale, Tarneit and West Footscray, modifications to Sunshine and Footscray stations, and several new rail bridges  the Port Capacity Project at the Port of Melbourne, which will increase stevedoring capacity and redevelop Webb Dock as an international container terminal  the Northern Victoria Irrigation Renewal Project, which is Australia’s largest irrigation modernisation project, and will upgrade irrigation infrastructure in the Goulburn Murray Irrigation District  the Victorian desalination plant project at Wonthaggi. This is expected to be commissioned in 2012-13, and  a number of road upgrades including the Dingley Bypass, Ballarat Western Link Road and the Koo Wee Rup Bypass.

For further information contact Barry Diamond on (03) 8603 1118.

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Tasmania Budget: 2012-13 Budget The Tasmania Budget for the 2012-13 financial year was delivered on 17 May 2012. In delivering the Budget the Tasmanian Treasurer acknowledged that the Tasmanian economy continues to face adverse external factors such as high exchange rates, the winding down of the Australian Government fiscal stimulus measures and global and national conditions that do not favour Tasmania’s export sector. The Tasmanian Government is projecting a deficit of $283 million in 2012-13 and a return to surplus of $52.8 million in 2013-14. Taxation measures The Tasmanian Government has announced that in response to meeting the State’s fiscal challenges it will raise certain taxes to take effect from 1 October 2012. Whilst the overall rates of some taxes have been increased, no new taxes have been introduced. The following is a summary of the most significant taxation measures:

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Conveyance Duty – The top marginal rate for conveyance duty will be increased to 4.5 per cent for properties valued at $725,000 and above. This measure is estimated to generate an additional $5.6 million in revenue in 2012-13, and $7.5 million in 2013-14 over previous estimates.

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Insurance Duty – The rate of duty charged on contracts of general insurance will be increased from eight per cent to ten per cent of the premium paid. This measure is estimated to generate an additional $9.4 million in 2012-13, and $13.1 million in 2013-14 over previous estimates.

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Motor Tax – Motor tax on light vehicles will increase by 20 per cent. Motor tax on some classes of heavy vehicles will also be revised. These measures are estimated to generate an additional $8 million in 2012-13 over previous estimates.

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Duty on Motor Accident Insurance Board premiums – The duty on Motor Accident Insurance Board premiums will be increased from $6 to $20 per registration.

Revenue Revenue from State taxation is estimated to increase to $940.9 million in 2012-13, an increase of 3.8 per cent above the 2011-12 Budget estimate. Revenue from goods and services tax (GST) is estimated to decrease by 2.4 per cent to $1,700.8 million. Other points of interest

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The Tasmanian Government has committed $1.5 billion to infrastructure projects, including education, hospitals and health infrastructure, housing and roads.

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Economic growth is forecast to increase by 1.25 per cent in 2012-13 primarily due to exports to mainland Australia.

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The unemployment rate is expected to increase to 7.5 per cent in 2012-13.

Australian Capital Territory: harmonising landholder duty laws with New South Wales On 10 May 2012 the Duties (Landholders) Amendment Bill 2012 was tabled in the Legislative Assembly of the Australian Capital Territory (ACT). The purpose of the Bill is to improve consistency with New South Wales (NSW) in relation to landholder provisions and reduce the regulatory burden in order to continue to attract investment in the ACT. The proposed amendments to the Duties Act 1999 (ACT) will align the ACT more closely with NSW. For further information, please contact your usual PwC adviser or: Barry Diamond Tel: +61 3 8603 1118 Costa Koutsis Tel: +61 2 8266 3981

© 2012 PricewaterhouseCoopers. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers a partnership formed in Australia, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This publication is a general summary. It is not legal or tax advice. Readers should not act on the basis of this publication before obtaining professional advice. PricewaterhouseCoopers is not licensed to provide financial product advice under the Corporations Act. Taxation is only one of the matters that you need to consider when making a decision on a financial product. You should consider taking advice from the holder of an Australian Financial Services License before making a decision on a financial product. Liability limited by a scheme approved under Professional Standards Legislation.

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