2010/2011 NSW State Budget

NSW Treasurer Eric Roozendaal released the NSW Budget on 8 June 2010.

The main economic outcome of the budget was the announced surplus of $101 million for the 2009/10 financial year - a massive turnaround from the deficit expected a year ago. Surpluses are also forecast out to 2013-14.

For 2010/11 a surplus of $773 million is expected, ahead of $885 million in 2011/12 and $863 million in 2012/13.

Business is a big winner from the budget, with the payroll tax cuts from July 2010 and the abolition of the insurance protection tax from July 2011.

The main features of the budget are outlined below:

1. NSW Home Builders Bonus

• From 1 July 2010, there will be transfer duty exemptions and concessions in respect of the purchase or construction of a new home.  Transfer duty concessions will be provided for the construction of new homes sold “off the plan” between 1 July 2010 and 30 June 2012. Buyers of new dwellings costing up to $600,000 will receive a 25% cut in normal duties, worth up to $5,623, if building has already started. Alternatively, buyers purchasing “off-the-plan”, before construction is underway, will pay zero stamp duty. This concession is worth up to $22,490. The greater concession for purchasing “off-the-plan” will assist the financing of new developments and help new home buyers.

• From 1 July 2010, there will be a transfer duty exemption for eligible seniors purchasing a new home as their principal place of residence.  People aged over 65 selling an existing property and buying a newly constructed home costing up to $600,000 will pay zero transfer duty. This measure will contribute both to the goal of helping older home owners seeking to “downsize” their home, and the goal of encouraging new home construction. The exemption will apply to sales between 1 July 2010 and 30 June 2012.

Mr Roozendaal said the measures were aimed at boosting housing supply and housing construction rates across the state.  "A key driver of economic growth," he said.

Read more about the NSW Home Builders Bonus

2. Payroll tax

• From 1 July 2010, the payroll tax rate will reduce from 5.65 per cent to 5.50 per cent.
• From 1 January 2011, the payroll tax rate will reduce from 5.50 per cent to 5.45 per cent.
• From 1 July 2010, an exemption for wages paid in respect of a maximum 14 weeks paternity leave is introduced.

Read more about payroll tax

3. Insurance protection tax

• Effective from 1 July 2011, Insurance Protection Tax (IPT) is to be abolished.  This will save insurance companies $69m each year. The IPT was imposed on insurers to fund the payment of claims and to repay any borrowings made after the collapse of the HIH group of insurance companies. Insurers’ contributions are determined by their market shares. The revenue from this tax is currently paid into the Policyholders Protection Fund.

Read more about insurance protection tax

 
4. Gaming machine tax

• From 1 July 2010, revised gaming machine tax rates will apply to hotels.  The current hotel gaming tax arrangements were introduced in the 2003/04 Budget. The changed tax rates took effect from 1 July 2004 and were phased in annually over seven years. From 1 July 2010, the revised hotel gaming tax rates in the table below will apply.

Annual Hotel Gaming Machine Duty Rates

Annual Revenue Range	Marginal Tax Rates per cent
Up to $200,000	0.0
$200,001 - $1,000,000	33.0
$1,000,001 - $5,000,000	36.0
$5,000,001 and above	50.0

Previously announced tax measures 

• Tax measures announced pre-Budget (which will take effect in coming years) include further reductions in payroll tax, introducing a sliding scale fee for land title transfers, increasing vehicle weight tax, and abolishing stamp duty on various transactions.
• An increase in fees for registration of land transfers will take effect in 2010/11. Currently a $190 flat fee is charged. An additional fee of 0.2% of the transfer value will apply for transfers valued above $500,000 and up to $1,000,000, or $1,000 plus 0.25% for transfers above $1,000,000.
• An increase in vehicle weight tax will contribute to the financing of the Metropolitan Transport Plan, announced on 21 February 2010. There will be no change for vehicles up to 975 kg, hybrid vehicles, motor cycles, trailers or carers’ vehicles. Concessional arrangements for farm vehicles and pensioners stay unchanged.
• Stamp duty on mortgages, non-real property transfers, and marketable securities will be abolished from 1 July 2012.

Should you wish to discuss any of these measures, please do not hesitate to contact one of our tax advisers:

Sydney - Tina Louras, Tax Principal : Email Tina

Newcastle - Darren Shone, Tax Principal : Email Darren