Commercial and Industrial property tax reform from 1 July 2024

For those investing in commercial or industrial property, you may or may not be aware that Commercial and Industrial property is moving from land transfer duty (also known as stamp duty) and landholder duty to an annual property tax known as the commercial and industrial property tax (CIPT) reform.

What is the CIPT reform?

The CIPT reform is detailed in the Commercial and Industrial Property Tax Reform Act 2024 (the Act) and includes amendments to several Acts including the Duties Act 2000 (the Duties Act) and the Taxation Administration Act 1997. The CIPT reform will be effective from 1 July 2024.

Transitioning into the CIPT reform

From 1 July 2024, commercial and industrial properties will transition into the CIPT reform if there is an eligible dutiable transaction or relevant acquisition, defined in the Act as an entry transaction.

Commercial and industrial properties can also enter the CIPT reform if the property is part of certain types of subdivisions or consolidations of titles.

How does the CIPT reform work?

Duty will still apply to entry transactions. A duty concession can apply to the entry transaction, such as the 50% concession for a transfer of eligible commercial and industrial property in regional Victoria.

Not every dutiable transaction or relevant acquisition is an entry transaction.

CIPT is not payable immediately following the entry transaction. Ten years after the entry transaction, CIPT will begin to apply to the property at a flat rate of 1% of the property’s site (unimproved) value each year provided the property continues to have a qualifying use. A reduced rate of .5% applies to build to rent land.

CIPT is different to land tax. A landowner may be liable to pay annual CIPT and annual land tax. However, land that is exempt land for land tax purposes will generally also be exempt for CIPT.

To find out further details about Commercial and Industrial property tax reform visit: SRO - Commercial and industrial property tax

If you're looking to purcahse a commerical or industrial property, you'll need a conveyancer.
Walsh Conveyancing would be happy to guide you through the conveyancing process.

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