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The New South Wales (NSW) government recently unveiled a series of tax measures to impact tax revenue in the coming years substantially.

These changes are expected to generate an additional $4.1 billion in revenue over the forward estimates.

For Australian business owners who like to stay updated on the latest financial developments, we have broken down the essential modifications in an easy-to-understand manner.

1. Corporate Restructures Face New Stamp Duty Regulations

Effective 1 February 2024, corporate restructuring is one of the most significant changes in the NSW budget. Historically, corporate restructures were exempt from stamp duty in the state, making them a cost-effective way to adjust business structures. However, the NSW government is set to impose a 10 per cent tax on corporate restructuring starting from the specified date.

In practical terms, this means that when businesses undergo structural changes, such as mergers, acquisitions, or reorganisations, they will be required to pay a 10 per cent stamp duty on the value of the transaction. This change aims to bolster the state’s revenue and ensure that businesses contribute their fair share in the event of significant corporate reshuffling.

2. Tightening of Landholder Duty for Trusts

The second substantial change in the NSW budget relates to the landholder duty for trusts. This change centres on the definition of a “significant interest” in a private unit trust and is set to reduce the threshold for acquiring such interest from 50 to 20 per cent.

Previously, an entity needed to acquire at least a 50 per cent interest in a private unit trust to trigger landholder duty. However, the revised threshold of 20 per cent will broaden the scope of transactions subject to this duty. Consequently, businesses and individuals acquiring significant interest in trusts will more likely incur landholder duty.

This change is designed to prevent trust structures from being used to avoid landholder duty, enhancing the state’s revenue collection capabilities while reinforcing the equity of the tax system.

3. Introduction of a Road User Charge for Low-Emission Vehicles

Lastly, another pivotal change to note in the NSW budget is the introduction of a Road User Charge (RUC) for zero and low-emission vehicles, practical from 1 July 2027 or when battery electric vehicles (EVs) constitute 30 per cent of new light vehicle registrations, whichever comes first.

Introducing a Road User Charge implies that owners of zero and low-emission vehicles will be required to pay a fee that helps fund road infrastructure, similar to the fuel excise tax paid by conventional vehicle owners. This change aligns with the broader efforts to ensure that all road users contribute their fair share to maintaining and developing the state’s road network.

The RUC for zero and low-emission vehicles aims to balance encouraging environmentally friendly transportation options and sustaining the funding for road infrastructure projects. As battery EV adoption increases, this charge will be implemented to ensure equitable support for maintaining the roads.

Stay Up-To-Date With Obligations And Opportunities

The recent changes to the NSW budget have introduced a range of tax measures that will significantly impact the state’s revenue and financial landscape.

Business owners and individuals with professional accountants should stay informed about these modifications, as they may affect their financial planning and transactions.

Staying up to date with these changes will enable businesses to make informed financial decisions and adapt to the evolving fiscal landscape in New South Wales.

If you have any questions about how these changes will affect you, contact us today.

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