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“This additional duty will hurt business revenues and affect the value of the property, leading to real job losses in NSW”
(Investment and Financial Services Association, Property Council of Australia, Infrastructure Partnerships Australia)
The Rees Labor Government is using a hidden tax grab to try to drag its Budget out of the red, said Shadow Treasurer Mike Baird.
“The ‘No New Tax’ claims by the Rees Government in last week’s Budget have been found to be misleading, given the legislation currently before the Parliament,’ Mr Baird said.
“The State Revenue Further Legislation Bill proposes a change in the way duty is paid on the transfer of businesses when they are sold and we expect this will net the Government hundreds of millions of dollars in extra revenue, although they refused to provide any detail or modelling,” he said.
“When the Rees Labor Government first flagged the change in the Mini-Budget, the extension of the tax was estimated to be modest. That was a complete con, as the detailed legislation now before the Parliament is far more extensive than they ever admitted.
“Many family businesses will be caught up in the change, as it means that a business which is being sold will have to pay duty on the transfer, if it holds land valued at more than $2 million. Previously, the duty only applied if the business was described as land-rich – meaning 60 percent of its assets were held in land.
“As an example, a retail store employing 25 staff with assets of $4 million and $3 million in other assets would pay $21,000 in duty when the business was sold, but under this new system it would total $214,490, a 900 per cent increase*.
“In some cases, it could mean struggling businesses which are seeking a buyer to survive, will go under, as the tax now payable will be greater than the value of the business.
“We have opposed this legislation, which virtually puts the CLOSED FOR BUSINESS sign up out the front of NSW. We are already the highest taxing state, and now we are adding to it. Our major competitors, Victoria and Queensland, do not have this tax model.
“However we do support the extension of the First Home Owners Grant, which is included in this Bill, and call on the Government to separate this element of the Bill from the overall legislation.
“As I stated in my speech on this legislation last night**:
‘This bill includes some sensible provisions for first home buyers…Although sensible, the Opposition would argue that these provisions could be included in a different bill at a different time.’ “The Rees Labor Government shouldn’t be trying to play politics on such an important issue as the first home owners grant. We will not support another tax grab from this Government as it struggles to get its Budget out of the red. We continue to fight for reduced taxes for business at this difficult time,” Mr Baird said.
MEDIA: Wendy Black - 0418 532 534
* Case Study prepared by the Investment and Financial Services Association, Property Council of Australia, Infrastructure Partnerships Australia
** Mike Baird, Hansard, 23 June 2009
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