The Victorian government’s introduction of new stamp duty laws came into effect on 19 June 2019, including radical changes to how stamp duty is applied toward property development. In essence, the passing of the State Tax Acts Amendment Bill 2019 would mean that development agreements between the developer and landowner, and other form of arrangements, would now be subject to stamp duty.  

This will apply to all land valued at $1 million or more that is held by individuals, discretionary trusts and self- managed superannuation funds. Regardless of the percentage of the interest associated with the developer’s total profit derived from the development, the stamp duty of 5.5 per cent still applies.

For example, a developer enters into an agreement with a landholder for land worth $2 million. Under this development, the developer is entitled to 40 per cent of the profits from the development ($800,000). This means that under a stamp duty rate of 5.5 per cent, the developer would have to pay a duty of $44,000

Master Builders Victoria is concerned that the introduction of such laws, which was done without industry consultation, risks exacerbating an already stagnating housing market. The Victorian building and construction industry contributes approximately 45 per cent of the state’s tax revenue, the majority of which comes from stamp duty.

The measure may have the unintended consequence of decreasing the supply of affordable housing, thereby reducing income from our sector.

Members who want more information are advised to contact their tax/property lawyer or accountant.