In September, the Western Australian state government extended its stamp duty rebates for off-the-plan apartment purchases for another two years, but the rebate was reduced from 75 per cent to 50 per cent of the applicable transfer duty, capped at $50,000.
While the Real Estate Institute of Western Australia had welcomed the move, it had criticised the state government for not doing more to overhaul stamp duty.
In a new 2022-23 pre-budget submission, REIWA has called on the Western Australian government to introduce four targeted reforms.
Damian Collins, president of the Real Estate Institute of Western Australia (REIWA) commented that while the state is in a “prime position to deliver bold housing reform”, it could instead introduce smaller targeted changes to help relieve pressure on the property market.
“The pandemic is not an excuse to take tax reform off the table altogether though. There are smaller, more practical reforms that if implemented would target stamp duty without requiring a major upheaval of the state’s taxation system,” Mr Collins said.
“These reforms would pose minimal risk for the WA Government, deliver significant benefits to the economy and housing market, and ease the unfair financial burden placed on everyday West Aussies by these inefficient taxes.”
The suggested reforms are:
1. Introduce a one-off, $10,000 residential stamp duty concession for those aged 65 and over.
Stamp duty is a major deterrent to people wishing to switch into more suitable accommodation, Mr Collins said, with many either struggling to raise the upfront costs or being reluctant to dip into their hard-earned retirement savings.
“Stamp duty concessions for seniors is not a radical idea. Victoria, Tasmania, Australian Capital Territory and Northern Territory all offer seniors stamp duty concessions, there is no reason WA can’t do the same,” he said.
“This would free up housing stock and assist with mobility across the entire market.”
2. Lock in the Off-the-Plan Duty Rebate Scheme permanently.
The scheme was introduced in 2019 with the aim of incentivising apartment developments. It was initially set to expire on 23 October last year, before it was extended until 24 October 2023.
“We were pleased the WA Government decided to extend the scheme in its 2021-22 Budget, but now it is time to make this a permanent fixture of the WA taxation system,” Mr Collins said.
“If this scheme is removed, the demand for apartments will soften, which will impact the steady supply of diverse housing and reduce the creation of construction jobs in the state in the medium to longer term.
“The Off-the-Plan Duty Rebate Scheme has been very effective in promoting infill and is precisely the policy measure that our property market needs to reduce urban sprawl.”
3. Remove stamp duty on the sale of small-business assets.
Mr Collins said it was disappointing that Western Australia was one of the only places in the country that still imposed stamp duty taxes on small businesses.
“Victoria, New South Wales, Tasmanian, South Australia and the ACT have all removed stamp duty from small business sales, it is high time WA did too,” he said.
“We are creating a business environment that is less competitive than the eastern states and placing a cost burden on small businesses which discourages productivity and the entrepreneurial spirit.”
4. Increase the threshold of concessional rate of stamp duty for first home buyers.
The REIWA has urged the government to lift the First Home Owner Rate of Duty (FHOR) duty-free thresholds from $430,000 to $530,000, with the concessional rate threshold lifted accordingly.
“It is important that the WA market remains accessible for first home buyers. We need to ensure that the duty-free thresholds and concessional rates for first home buyers is reflective of where the market is at,” Mr Collins said.
“We have seen strong price growth across the state over the last 18 months, so it is time to adjust the thresholds to ensure the dream of home ownership remains achievable for West Australians.”
[Related: FHB loans aren’t riskier: RBA]
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.