From 1 July 2024, the lump-sum stamp duty system for commercial and industrial properties will transition to an annual property tax.

Commercial and industrial properties will switch to the new system as they are sold, with the first purchaser of a commercial or industrial property after 1 July 2024 to be able to choose to either pay the stamp duty liability as an upfront lump sum or in fixed instalments over 10 years equal to stamp duty and interest with a government-facilitated transition loan.

These arrangements will not apply to the current owner/s of any commercial or industrial property purchased before 1 July 2024. Once a property enters the new system after this time, stamp duty will no longer be payable on a transaction and the annual property tax will apply.

The annual property tax that will ultimately replace stamp duty for commercial and industrial property will be set at a flat one per cent of the property’s unimproved land value.

Forming part of the Economic Growth Package in the Victorian Budget 2023/24, the cumulative increase in the size of the Victorian economy from the reform is up to $50 billion in Net Present Value terms.

Victorian Treasurer Tim Pallas said: “Business and industry have told us they want this reform and we’ve listened. These landmark changes will enable businesses to be more dynamic and agile, and to grow and employ more workers.

“We’re removing barriers to larger investments, accelerating business growth and helping our economy grow even stronger.”

The Victorian Government says it will consult with business and industry in coming months to detail the final form of the transition by the end of the year.

Victorian Chamber Chief Executive Paul Guerra said: “The Victorian Chamber has been working with the State Government on this landmark and generational productivity reform which businesses across Victoria will welcome.

“This is exactly the type of progressive tax reform that is required to free up stamp duty charges which will accelerate building upgrades, stimulate investment in commercial property and free up more capital.”

There are no current plans to expand this reform to residential properties.

Victorian Chamber advocacy

The announcement aligns with Victorian Chamber advocacy for conditions that make it easier and more economically attractive to own and operate a business In Victoria.

Swapping property stamp duty with a broad-based land tax system was a key recommendation of the Victorian Chamber’s 2023-24 State Budget Submission.

While the announcement excludes residential properties, removing upfront costs on commercial or industrial buildings will make it easier for businesses to get established, boosting business growth and expansion.