Background
From 1 July 2023, several amendments to taxes and duties in the ACT came into effect.
Significantly, Lease Variation Charges (LVC) have been updated for the first time since 2017 through the Planning and Development (Lease Variation Charges) Determination 2023 (2023 Determination). The 2023 Determination replaces the Planning and Development (Lease Variation Charges) Determination 2017 (No 2) (2017 Determination).
In addition to the 2023 Determination, on 1 July 2023, several other changes have come into force for other duties and taxes in the ACT, including:
(a) conveyance (stamp) duty;
(b) general rates and levies;
(c) land rent; and
(d) land tax.
Lease Variation Charge
Overview
The aim of the LVC Determination is to assign clear, fixed, unambiguous LVC values to specified lease variations in a specified locality (Territory Plan zone or sub-location within a zone).
The 2023 Determination applies to:
(a) development applications for lease variations submitted on or after 1 July 2023; and
(b) section 276E chargeable variations (ie Codified LVCs) and variations of nominal leases.
DAs submitted prior to 1 July 2023 will be subject to the charges specified in the 2017 Determination.
Amendments have been made to all schedules of the previous 2017 Determination. We have focused on some of the most relevant changes, including:
(a) Specific Charges
(b) Residential Charges
(c) Commercial and Industrial Charges - Commercial: Town Centres
(d) Commercial and Industrial Charges - Commercial: Group Centres
Increases
The 2023 Determination has increased charges across most localities. For example, in Schedule 1, the LVC for lease variations to limit the number of dwellings on a residential lease has increased from $30,000 to $40,000 per dwelling regardless of the number of dwellings. Additionally, for the Residential, Commercial Town Centres and Commercial Group Centres that we assess below, almost all charges have increased (to varying degrees).
No changes and decreases
There are a number of charges which have interestingly not seen a change. For example, the majority of Schedule 1 – Specific Charges have remained the same, including LVC for variations to limit the maximum number of non-residential units permitted on land under a non-residential lease to 3 units or less and LVC for variations to consolidate or subdivide leases.
There are also some charges which have moderately decreased including lease variations for additional GFA in Commercial CZ1 Group Centre – Core in Holt, which has seen a decrease in LVC from $730 to $715 per square metre of additional GFA, while Group Centre – Business and Group Centre – Services in Holt has remained the same at $650 per square metre of additional GFA.
Selected sample of amendments
We have extracted below a comparison between key specified charges and charges for key localities under the 2017 Determination and the 2023 Determination.
Other updates
Amendments have been made to a number of other taxes and duties in the ACT including:
(a) conveyance duty;
(b) general rates and levies;
(c) land rent; and
(d) land tax.
Of these amendments, those that have increased have done so generally in line with previous increases. For example, the fixed portion of general rates has increased by 3.75% for 2023-24, consistent with the 3.75% increase for 2022-23, and in line with the ACT Government’s tax reform program. This applies similarly to the 5% increase in Land Tax.
The eligibility threshold for some duties and exemptions has increased, for example the off-the-plan unit duty exemption eligibility threshold has increased from $600,000 to $700,000, meaning that no stamp duty will be paid for off-the-plan owner occupier purchases valued at $700,000 or less. This provides a wider threshold for eligibility and greater scope for the exemption to apply. The commercial conveyance duty tax free threshold has additionally been increased, from $1,700,000 to $1,800,000 providing the same benefits, with no duty payable up to $1,800,000.
The key changes have been summarised below.
Conveyance duty
DUTY
|
2022-23
|
2023-24
|
Residential owner occupiers |
Properties up to $260,000: $0.60 per $100.00 |
Properties up to $260,000: $0.49 per $100.00 |
Commercial conveyance duty tax free threshold |
$1,700,000 |
$1,800,000 |
Home buyer concession scheme |
Concession cap: $34,790.00 |
Concession cap: $34,504.00 |
Off the plan unit duty exemption |
Eligible property threshold: $600,000 |
Eligible property threshold: $700,000 |
General rates and levies
DUTY
|
2022-23
|
2023-24
|
General rates residential |
3.75% increase to fixed charge |
3.75% increase to fixed charge Marginal rating percentage has slightly decreased across all values |
General rates commercial |
3.75% increase to fixed charge |
3.75% increase to fixed charge Marginal rating percentage has slightly increased across all values |
Police, fire and emergency services levy (was the fire and emergency levy) |
Residential and rural properties: $361.38 Commercial properties: Average Unimproved Value x Marginal Rates |
Residential and rural properties: $375 Commercial properties: Average Unimproved Value x Marginal Rates |
Safer families levy |
$40.00 |
$45.00 |
Land rent
DUTY
|
2022-23
|
2023-24
|
Land rent |
Pre-1 October 2013 leases: Base gross income threshold of $115,300 to be eligible. Post-1 October 2012 leases: Base gross income threshold of $160,000 to be eligible. |
Pre-1 October 2013 leases: Base gross income threshold of $117,100 to be eligible. Post-1 October 2013 leases: Base gross income threshold of $170,000 to be eligible. |
Land tax
DUTY
|
2022-23
|
2023-24
|
Land tax |
5% increase to fixed charge Fixed charge: $1,462 |
5% increase to fixed charge Fixed charge: $1,535 Marginal rating percentage has remained the same |
..