The 2024/25 Victorian State Budget focuses on the cost of living, workforce shortages and the state’s ongoing ‘Big Build’ projects. It also introduces key financial changes and investments aimed at supporting and stimulating business growth.
The complete abolition of stamp duty on commercial and industrial properties is a major reform, while changes to the payroll tax are set to benefit Victorian SMEs. These changes are coupled with a suite of measures aimed at facilitating economic growth, including funding for innovation and startup support through LaunchVic, incentives to draw international business events to the state, and dedicated advice and growth support for small businesses.
What’s in the Budget for Small Business?
There are no new State taxes proposed in 2024-25 Victorian State Budget. However, there are still new, changed and/or increased State taxes announced in previous Budgets, and legislated, that are coming into effect:
Payroll tax
The tax-free threshold will see an increase, relieving many small businesses from the burden of payroll tax to support their growth.
- The threshold will rise from taxable wages of $700,000 to $900,000 starting from 1 July 2024.
- Additionally, from this date, businesses paying over $3 million in wages will see the tax-free threshold benefits decrease, phasing out entirely for wages over $5 million.
- The tax-free threshold is set for a further increase to $1 million from 1 July 2025.
Business tax reforms and investments for economic growth
Business Insurance Duty
Beginning from 1 July 2024, there will be a gradual abolition of business insurance duty, projected to save businesses $516 million over four years.
Investment in Innovation
The government is investing $40 million in LaunchVic to support Victoria's 3,400+ startups, fostering innovation and entrepreneurship.
Business Events and Support
To enhance Victoria’s appeal for international business events, $9.4 million has been allocated. Moreover, $2.3 million will be utilized to provide further support and growth advice to small businesses.
What’s in the Budget for Commercial Property Owners & Investors?
Abolition of Stamp Duty
- A landmark reform will be initiated, eliminating stamp duty on commercial and industrial properties from 1 July 2024, accounting for a $266 million property tax cut over four years.
- In place of stamp duty, a new annual commercial and industrial property tax will be implemented ten years post-transaction.
- This reform should incentivise businesses to invest and relocate, projecting an economic uplift of up to $50 billion over 40 years and the creation of approximately 12,600 jobs.
What’s in the Budget for Residential Property Owners & Investors?
Land tax
A reduction of land tax thresholds from a capital improved value of $300,000 to $50,000 means many more landowners will be subject to land tax. This would still exclude your main residence so no change there.
Vacant residential land tax (VRLT)
VRLT applies to land homes that were vacant for more than 6 months in the preceding calendar year. This used to be restricted to land in the inner city and middle ring of Melbourne only, but from 1 January 2025 will apply to land throughout Victoria.
There is an exemption for holiday homes used for at least 4 weeks per year (which need not be continuous use). Use can also be by a relative of the owner. Importantly, holiday homes owned in a discretionary or unit trust cannot avail themselves of this exemption.
Absentee owner surcharge
This is additional land tax payable by an absentee owner. From the 2024 land tax year, this will double from 2% to 4%.
What’s in the Budget for Families & Individuals?
For families
The $400 School Saving Bonus is a relief measure aimed directly at alleviating the financial burden on families with school-aged children. This one-off payment is designed to assist with the costs associated with children's education, such as uniforms, camps, excursions, and other school-related expenses. The bonus is for families with children enrolled in government schools, as well as eligible families with children in non-government schools, but details on how it will be rolled out are yet to be confirmed.
For Home Buyers
The budget contains $700 million to extend the Victorian Homebuyer Fund, a shared equity scheme that can help Victorians purchase a home with a 5% deposit. If you’re looking to purchase a home, our home loan experts can help you understand and take advantage of this scheme.
Priority Workforce Investments
TAFE and Skills Development
$555 million has been allocated to support TAFE institutions and provide free TAFE courses, aimed at encouraging the development of skills necessary for various industries in Victoria.
Early Childhood Education
Good news if you’re in the business of running childcare centres . $370 million is dedicated to attract, train, and increase the number of early childhood educators and teachers, addressing the demand in the educational sector.
Renewable Energy Sector Training
The budget includes funding for the establishment of clean energy worker training centres specific to hydrogen and wind energy sectors, and a State Electricity Commission Centre of Training Excellence, intending to create a skilled workforce for the renewable energy sector.
Mental Health Graduate Program
An investment of $16 million to create a new mental health graduate program signifies an effort to expand the mental health workforce and services in Victoria.
Get in Touch with our Advisors to Discuss Your Business & Life
If you’re wondering how any of the above budget measures will impact you or your business, our Melbourne-based team of advisors can help you navigate every twist and turn. Contact us today or submit the form below and we’ll be in touch.
