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2013-14 Queensland Budget

What do the tax revenue measures mean for your business?

2013-14 Queensland Budget: What do the tax revenue measures mean for your business?4 June 2013: The Queensland Treasurer, the Hon. Tim Nicholls MP, has presented the Queensland Government’s second budget.

Introduction

In a year that saw Queensland hit with another natural disaster and a $4.2 billion revenue collapse, the spotlight in this budget was once again on state tax revenue measures.

In the Government’s second budget in the 15 months since its election, and having ruled out asset sales in this term, there was a strong focus on reducing expenditure and implementing state tax measures as a mechanism to combat the fall in revenue driven by declining transaction value and declining property and mineral values. However, many of the state revenue measures announced in the budget were unsurprising as they had already been signalled by the Government in the lead up to the budget.

In this Deloitte State Budget Brief we analyse some of the key state revenue measures announced in the Queensland state budget which may impact your business in Queensland.

Stamp Duty

Insurance duty rates on the up

In the lead up to the budget announcement, the Government signalled its intention to increase the rate of duty on policies of insurance. This was confirmed in the budget announcement, with the rate for bot“class 1 general insurance” and “class 2 general insurance” increasing to 9% of the premium (up from 7.5% for “class 1 general insurance” and 5% for “class 2 general insurance”).

“Class 1 general insurance” includes insurance for things other than professional indemnity, personal injury resulting from air travel, motor vehicles (except compulsory third party [CTP] insurance), certain home mortgages and life insurance riders. All other insurance, except for life insurance, CTP insurance and workers compensation insurance, is “class 2 general insurance”. The change in insurance duty rates will add around a further $25 duty annually to a policy insuring a $300,000 home with $75,000 contents.

In the lead up to the budget, the Treasurer stated that the increase in the rate of insurance duty was to fund the Queensland Government’s contribution to the National Disability Insurance Scheme (Disability Care). However, the increase will only partially fund that contribution.

The Government announced that the changes are intended to simplify the insurance duty regime in Queensland and make it consistent and competitive with other Australian jurisdictions while still maintaining one of the lowest general insurance rates in Australia (which is equal to that applicable in New South Wales).  Significantly, this increase in insurance duty rate will see insurance duty account for 25.1% of the revenue generated from all duties by 2016/17 (up from 18.1% currently) and overtake land tax from 2015/16 in terms of the dollar amount of revenue raised, cementing insurance duty as an important revenue source for the Government.

The change in insurance rates is intended to apply to insurance premiums paid for insurance policies entered into on or after 1 August 2013.

Policies of life insurance, workers compensation insurance and CTP motor vehicle insurance will remain unaffected by the increase in the general insurance duty rate.

Changes for Trusts

Although not announced in the budget, the Revenue Amendment and Trade and Investment Queensland Bill 2013 (Qld) also makes minor amendments to the trust provisions, particularly in relation to limiting existing stamp duty exemptions for public superannuation entities.

Payroll Tax

Payroll tax threshold increase deferred

The Government has deferred its election commitment to increase the payroll tax threshold by $100,000 each year and instead plans to keep the current payroll tax threshold of $1.1 million for the next two years (with the threshold now not increasing to $1.2 million until 1 July 2015). This will result in a saving to revenue of at least $235 million over the forward estimates.

While Queensland will still maintain one of the highest payroll tax thresholds and lowest payroll tax rates in Australia, the Government’s decision to defer its election commitment is disappointing and will increase the tax burden on small to medium business operators in Queensland. These entities are already carrying a large share of the state tax burden, given payroll tax revenue is forecast to exceed stamp duty revenue each year from 2011/12 to 2016/17.

No changes were announced to the payroll tax rate.

Land Tax

While there were no land tax revenue measures announced as part of the budget, the Government announced that, as part of its commitment to reducing waste and improving efficiency, landholders will be provided with an option to receive their annual statutory land valuation electronically.

State Royalties

Despite the more than 21% fall in royalty receipts (due primarily to the fall in resources prices), there were no state royalties measures announced as part of the budget. Royalty revenues are budgeted to increase by some $400 million in 2013/14, due principally to a rebound in coal prices and as a result of changes to the royalty rates announced in the budget introduced last September.

Other Revenue Measures

  • Emergency Management, Fire and Rescue Levy – The Government announced in the budget that the Urban Fire Levy will change to the Emergency Management, Fire and Rescue Levy to offset the cost of emergency management and broaden the funding base for emergency services. The annual levy will apply to all rateable properties and increase by 6.5% from 1 January 2014. The expected impact on metropolitan households is an additional $10.80 each year, however, with the application of ‘property groups’ and ‘location classes’, some commercial properties will see increases of over $179,000. The Government announced that local governments which are affected for the first time as a result of the changes will be provided with transitional assistance
  • No rebate for electricity prices – Despite a record 22.6% increase to general household electricity prices, the Government confirmed in the budget that it will not provide households or businesses with a rebate outside what is offered under existing concessions
  • No flood levy – The Government confirmed it would not introduce a flood levy.

Contacts

If you have any questions in relation to the budget announcements and how they may impact your organisation, or if you have any questions in relation to state taxes matters generally, please contact James Petterson or Robert Nguyen or your usual Deloitte State Taxes adviser.

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