Below are the latest tax insights and essential updates to keep you informed and compliant.

Vacant Residential Land Tax Notifications to be Lodged by 15 January 2025

In our November 2024 newsletter, we confirmed that under the expansion to the Vacant Residential Land Tax (“VRLT”) regime you will need to notify the SRO if your residential property was vacant for more than 6 months in 2024 (including those held in companies or trusts).

Even if you are eligible for an exemption, such as the holiday home exemption, the owner is still required to notify the SRO by 15 January and apply for the exemption.

The SRO has since provided further clarification on how this notification system will operate, including opening the online VRLT notification portal. Owners of residential property which was vacant for more than 6 months in 2024 will need to notify the SRO via the online portal (unless the property is exempt from land tax) by 15 January 2025. If the property is exempt from VRLT, for instance due to the holiday home exemption, you will then need to apply for the exemption through the online portal.

Where a notification has already been made to the SRO, including properties that were subject to VRLT under the existing VRLT rules prior to 1 January 2025, you will not need to make another notification in the next year. You will only need to make a notification in the first year of vacancy, or if your circumstances change from the previous year.

Should you require any assistance with VRLT reporting or wish to determine whether you may be eligible for an exemption from VRLT, please reach out to your SiP advisor.

Super Update – Proposed Tax on Superannuation Balances Exceeding $3m

To one’s delight, Division 296 (the proposed tax on superannuation balances exceeding $3m) was not heard by the Senate before the last sitting of Parliament for 2024 had closed.

What does this mean for you?

With no clarity in sight, the best thing one can do is sit and wait.

Parliament will resume in February 2025. At this point it could be brought to the Senate, however its unclear whether the current Government will have the necessary crossbench support to pass the legislation.

There has been rumours of an early election, if this were to happen it is possible this legislation will be put on hold as the taxing on unrealised capital gains, impact on lumpy assets, and outrage by those in the know has not been very popular and would not be seen as an election winner, to say the least.

As always, we will provide further clarity once we know more, but for now it should be business as usual. As previously suggested it would not be advisable to do anything until we have certainty.

Temporary Duty Concession for Off-The-Plan Purchases

A new concession is available to reduce the land transfer duty liability for dwellings purchased off-the-plan. To be eligible for the concession, the following criteria must be satisfied:

• The contract is entered into on or after 21 October 2024 and before 21 October 2025 (regardless of whether settlement occurs outside of this 12-month window).
• The property is residential, i.e. it must contain a dwelling.
• The dwelling is purchased off-the-plan and is part of a strata subdivision with common property, such as apartments and townhouses.

There is no purchase price threshold to be eligible for this concession. Additionally, if the eligibility criteria are satisfied, it is available to all purchasers (such as investors, companies and trusts), unlike the existing first home buyer duty concession or the principal place of residence duty concession.

Land transfer duty is charged to the purchaser based on the ‘dutiable value’ of the property. Generally, the dutiable value is the purchase price. The rate of duty is applied based on a sliding scale depending on the dutiable value. For instance, land transfer duty is 5.5% where the dutiable value is between $960,000 – $2,000,000.

This concession reduces the dutiable value of the property by the construction costs that are incurred after the contract date. In other words, land transfer duty is calculated on a reduced dutiable value which essentially accounts only for the property’s value at the time of contract.

Reform to Student Loan Indexation

In response to concerns over increasing student debts, the Australian government has announced a number of changes that will cut student loan balances and aim to make the repayment system fairer.

The reforms include:

• A one-off 20% reduction to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan balances.
  • As per the government’s factsheet, the average HELP balance is $27,600, which will see a reduction of $5,520 to their outstanding loan.
  • This will automatically be applied by the ATO prior to 1 June 2025, which is the normal timing of when annual indexation is applied.
• From 1 July 2025, the minimum repayment threshold will increase from $54,435 to $67,000. Individuals will therefore be able to earn more before needing to start making compulsory repayments.
• From 1 July 2025, moving to a marginal repayment system rather than based on a proportion of total income, which should smooth out the repayment of student loans. The proposed marginal rates are:

These proposals will be introduced to parliament early in 2025 and follow the already-passed cap on the HELP indexation rate at the lower of the Consumer Price Index (“CPI”) or the Wage Price Index to apply retrospectively from 1 June 2023. The ATO will automatically apply an indexation credit for outstanding student loans, or issue a refund for HELP debts that were completely repaid after the application of 2023 or 2024 indexation.

These reforms should mean that Australian students and workers will have less debt and more money in their take-home pay.

Proposed Reforms to Philanthropic Giving

The Labor government announced a number of reforms to the philanthropic landscape which aim support greater participation in philanthropy.

The reforms include:

• Removing the $2 limit on donations to be eligible for a tax deduction. This should encourage a greater number of small donations, including through rounding up purchases at the point of sale in store and online.
• Changes to how Ancillary Funds operate:
  • Ancillary Funds will be renamed to ‘Giving Funds’.
  • Giving Funds will be allowed to smooth their annual distributions over 3 years. This will provide greater flexibility for charities to fund capital works or large projects.
  • The government will commit to a consultation process to increase the annual distribution rate for Giving Funds.

Broadly, Ancillary Funds/Giving Funds are set up for the purpose of providing money, property or benefits to designated charities. They are special funds that provide a link between donors and charities and are endorsed as Deductible Gift Recipients (“DGR”) if certain requirements are met.

These reforms intend to make it easier for these funds to facilitate giving and should help better fulfil their philanthropic purpose in supporting the charity sector.

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The above tax summary is intended to be general in nature and does not constitute advice. 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.