Happy Easter to all of our clients and friends as this is our Easter Newsletter 2024!
Easter’s a great time of year in both Ballarat and Torquay – our two office locations. Coming up around here, we have the Ballarat Heritage Festival, which should be both fun and fascinating for families. Ballarat is one of the most historically iconic towns in Australia, and this festival celebrates our golden past with events at Sovereign Hill, car shows, special exhibitions, steam train rides, food & drink happenings and much more.
We’re looking forward to it, as a couple of our accountants are history buffs: they like to quote you dates and stats from the past like walking, talking encyclopaedias – they’re good value to have on your team at trivia nights!
Rip Curl Bells Beach Surf Championships
In Torquay we are of course about to host the globally renowned Rip Curl Pro Bells Beach World Surf League Championship. This is the annual highlight of the calendar year for the beautiful and awesome Surf Coast, and the CGH number crunchers will be hanging 5 and 10 on the beaches, and watching the action, because they’re gnarly dudes at heart.
It’s true – our accountants are laid back folks, who generally lead very happy lives – because they are always able to achieve a balance.
But sometimes when they get frustrated, our tax advisors are known to swear and cuss – the most common expletive heard is “Sheet!”
We hope you enjoy our accountant jokes…
But seriously, right now is a good time to let our clients know a bit more about the current changes to land taxes and also the investor’s Airbnb Tax. These have been talked about quite extensively recently, which you would have noticed. Changes are affecting other states and territories, but the most significant land tax shift seems to be in Victoria.
The New Airbnb Tax In Victoria Starting January 2025
We know that many of our clients have investment properties, which are rented out – and some of you will no doubt have your properties in short term rentals, such as Airbnb. The Victorian Government estimates that there are at least 36,000 short stay accommodations in this state, and they want a piece of the action. A new short stay property tax will come into effect on 1 January 2025, and it will boost revenue for Spring Street by well over $70 million per year.
Basically, the tax is a 7.5% levy on short stay rentals. So, an Airbnb in Torquay at $850 will in fact become $913.75 in total.
It should be noted that these sorts of changes are happening around the world, as governments are waking up to the potential to increase revenue by taxing in this space. Airbnb and similar operators are not very happy about it and have tried to object, but there’s no stopping it now. It’s a bit of a no-brainer for the people who think up new taxes in governments, because it’s easily defended as a smart measure for also freeing up more housing stock for families looking for rental properties in which to live. And this is fair enough, as the market for long term renters is very tight and can be expensive.
If you have an investment property which you make available for short term accommodation, you need to ask yourself whether the short term gains are still worth it, given this development. There are of course many pros and cons to be weighed up. It depends on the type and location of the property and what other costs are involved (i.e. cleaning etc.) There are certain risks with short term rentals which aren’t really a factor with long term tenants. We advise our clients to review your situation, and please don’t hesitate to contact us for advice if you’re unsure.
Land Tax In Victoria
There are actually a number of land tax changes which have come into effect recently, and some others in the pipeline. Some are rather obscure and complex, but a few are significant, and you should be aware of them – and consider your position accordingly. Those are:
The Victorian Government has reduced the tax free threshold for land tax. The threshold for land with a capital unimproved value (CUV) has been decreased to $50,000. Rates for taxable landholdings (not owned by trusts) will attract surcharges: $500 per $50,000-$100,000 and $975 per $100,000-$300,000. This measure is supposed to be temporary, and is meant to help the state government with its ‘COVID Debt Repayment Plan’ – so stay tuned, we’ll see if it gets scrapped down the track, hmm, don’t hold your breath…
The surcharge rate for ‘absentee owners’ has now doubled, and also the minimum threshold for non-trust absentee owners has decreased. The provisions for this are complex and we suggest you get advice – from us.
Fixtures are to be included in Capital Improved Value, and this will impact valuations, council rates, fire services levies and other things. Ask our experts at CGH for a more detailed explanation, if you need clarification.
The Vacant Residential Land Tax In Victoria
The Vacant Residential Land Tax is going to be expanded. It is already in place across metropolitan Melbourne but from next year will apply across the state. Residential property that is unoccupied for more than six months will attract this tax, and it will increase annually, the longer the property stays that way. This tax is quite unpopular (not unusual for taxes). For most people it is recommended that a residential property does not remain ‘unimproved’ (vacant) unless there’s a specific and good reason to do so.
It’s not just Victoria making land tax changes – NSW is introducing new laws around stamp duty, trusts, linked entity and ‘Principal Place of Residence’ exemption from land tax. Most of the other states are doing similar things in general, but all are slightly different, as every state has its own unique set of laws, circumstances, finances and objectives.
We do hope that the above information is helpful. It looks like there will be more changes in this area in coming years. As always, please reach out to us with any queries.
We hope the Easter Bunny brings so many chocolate eggs to our clients and families that even our intrepid CPAs couldn’t keep track of the numbers!
Best wishes for this break and for the longer upcoming school holidays, from your trusted local accountants in Ballarat and Torquay – CGH Accounting Services.
