The 2024/25 Victorian State Budget was handed down on 7 May 2024, with Jacinta Allan’s first Budget as Premier taking a cautious approach.

Significantly, there were no new property taxes announced, which is a welcome relief for property owners already battling with the recent changes, such as the increases to land tax and absentee surcharge, and expansion of the Vacant Residential Land Tax (“VRLT”) from 1 January 2025, to name a few. However, there was unfortunately no announcement on the holiday home exemption from VRLT for holiday homes currently held in trust structures.

We’ve summarised here some of the key announcements from the State Budget.

Increase to Payroll Tax Threshold

Businesses with a payroll below $3M should benefit from an increase in the Payroll Tax thresholds. The government projects that this change to the threshold will exempt around 6,000 businesses from paying Payroll Tax and reduce the Payroll Tax bill for a further 22,000 businesses.

Currently, Victorian employers with total national wages below $700,000 are not subject to Payroll Tax in Victoria. However, the Budget has confirmed:

• From 1 July 2024, the threshold will increase to $900,000; and
• From 1 July 2025, the threshold will increase to $1 million.

However, no reduction to the general Payroll Tax rate of 4.85% was announced.

The table below illustrates the Payroll Tax payable as the tax-free threshold is increased over the next 2 years:

It is worth noting that from 1 July 2024, the payroll tax-free threshold will be phased out for larger businesses with taxable wages over $3 million, and those with wages over $5 million will no longer benefit from the threshold.

Ultimately, the net effect of these changes is that, from 1 July 2025, employers with wages between $1 million and $3 million should save $14,550 per year in Payroll Tax.

Commitment to Get More Victorians into Homes

A further $700 million has been committed to the $2.1 billion Victorian Homebuyer Fund Program – a shared-equity housing scheme between the Government and aspiring homeowners where broadly, the Government will fund 25% of the property purchase. The fund contributes to the purchase price in exchange for a proportionate equity interest in the property, which reduces the size of the deposit required thus aiming to help Victorians buy suitable homes sooner.

Additionally, the ceiling for eligible home purchases in regional Victoria has been increased from $600,000-$700,000 in order to be eligible for the program. As for metro properties, the limit hasn’t changed, with the value of the property needing to be below $950,000 to be eligible.

However, this is the last investment the Victorian government will make into the statewide scheme, before transitioning to the Federal government’s nationwide Help to Buy shared-equity scheme once it is established.

The Government is still committed to building 800,000 new homes over the next decade across Victoria to tackle the issue of housing supply. As part of this year’s Budget, a further $107 million was allocated to assist in reaching this target.

Increased SRO Compliance Action

As part of the State Budget, additional funds have been allocated to the State Revenue Office (“SRO”) to further expand the range and efficiency of their tax compliance programs. This means that we can expect to see more audits on SRO administered taxes, such as payroll tax, land tax and VRLT.

The application of many State administered taxes, such as VRLT and land tax, relies on the taxpayer making the appropriate disclosures to the SRO. As such, it is important that you review your affairs to ensure that all State tax obligations are in order should the SRO come knocking.

Cost of Living Assistance for Families

Several measures are proposed to assist families with cost of living pressures. These include:

• School Saving Bonus – from Term 1 2025, this bonus will give families with children at government schools, and eligible families at non-government schools, a $400 credit on their school family account to help meet the cost of activities and uniforms.
• Extending the Active Kids program – continuing to provide vouchers worth up to $200 to help eligible families cover the cost of sports.

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The above summary is intended to be general in nature. Should you believe that any of the above matters may be relevant to you or your Group’s particular circumstances, please discuss the specific details with your Slomoi Immerman Partners advisor.