State duties and taxes

Contributed by AnnetteMorgan and current to 27 July 2018

The following are duties and taxes imposed by state governments. In Western Australia, these taxes are administered by the Office of State Revenue (OSR). Further information on each can be obtained from the OSR on (08) 9262 1400 or the website at http://www.finance.wa.gov.au/cms/State_Revenue.aspx

Note: Payroll tax and other business taxes you pay, as well as related expenses, are deductible from your assessable income, provided you can establish a link between the expenses and your income-producing activities.

Payroll tax

Payroll tax is paid by employers on their employees’ remuneration, whether in cash or otherwise, where the employer’s total wage bill exceeds a threshold amount. Wages also includes amounts payable by employment agents. You will be liable to payroll tax at the rate of 5.5 per cent if you have a total wages bill of $850,000 or more. Related employers may be “grouped” so that the total wage bill exceeds the threshold even if it does not on an individual basis. Some amounts, including wages paid to apprentices, are non-taxable. An employee for the purposes of the Pay-roll Tax Assessment Act 2002 (WA) is broadly an employee by the common law definition. You may be exempted from payroll tax on wages paid if you are a religious organisation, hospital, school, government department, public benevolent or charitable institution.

You may be a public benevolent institution if you are concerned with the relief of some aspect of poverty or social distress. However, wages you pay for non-charitable activities are not exempt from payroll tax.

Duties tax

The Duties Act 2008 imposes duty on certain instruments, transactions and acquisitions. This Act is a complex area of law and is not dealt with at length here.

Instruments, or dutiable statements in relation to transactions or acquisitions, are generally required to be lodged for assessment within two months after their date and duty paid within one month of assessment. Penalty tax of up to 100% applies for late lodgment and late payment. In addition failure to lodge or pay is an offence. Many instruments or transactions cannot be enforced or registered if stamp duty has not been paid.

The WA government imposes duties tax on:

• transfers of land
• transfers of business assets and licences
• creation of trusts
• transfer of trust interests including units in unit trusts
• mortgages, including home mortgages
• general insurance policies
• grants or transfers of motor vehicle licences
• hire of goods
• transfers of land rich companies.

There are a number of exemptions from duties tax , most of which require fulfillment of conditions. They include:

• the purchase of a first home;
• transfers to beneficiaries under wills or trusts;
• family farm transfers;
• certain corporate reconstructions; and
• transfers on marriage or de facto breakdown (note this includes all de facto couples, including same sex couples under State law).

Land tax

If you own land, land tax is levied annually on the unimproved value of all land you own at 30 June in the year preceding the assessment year. Land tax is not charged where the total unimproved value of land you own does not exceed $300,000 (see table below). In addition, in the metropolitan region Metropolitan Region Improvement Tax (MRIT) of 0.14% is payable on land values greater than $300,000.

Aggregated Taxable Value of Land		Rate of Land Tax
	Not Exceeding
$0	$300,000	Nil
$300,001	$420,000	Flat rate of $300
$420,000	$1,000,000	$300 + 0.25 cent for each $1 in excess of $420,000
$1,000,000	$1,800,000	$1,750 + 0.90 cent for each $1 in excess of $1,000,000
$1,800,000	$5,000,000	$8,950 + 1.80 cents for each $1 in excess of $1,800,000
$5,000,000	$11,000,000	$66,550 + 2.00 cents for each $1 in excess of $5,000,000
$11,000,000		$186,550 + 2.67 cents for each $1 in excess of $11,000,000

In Western Australia, your principal residence will be exempt from land tax and MRIT. Land may also be exempt or entitled to a concession if it is used for primary production, as a retirement village, as a mining tenement, for educational or religious purposes, by a nonprofit body, or if it is held under an approved conservation covenant.