The New South Wales Government has announced a plan to overhaul the state’s tax system with stamp duty to be phased out in favour of an annual property tax. The reform could be set in motion in the second half of 2021 after seeking community feedback over the coming months.

The plan was announced yesterday in the 2020-21 NSW Budget.

Treasurer Dominic Perrottet said the current stamp duty system was centuries old and in need of an overhaul to give NSW residents a modern tax system.

“This is the single most important economic reform we can tackle to turn the Australian dream into NSW’s reality,” Mr Perrottet said.

The consultation process will kickstart with a proposed model that would:

  • Give people purchasing a property the choice between paying stamp duty upfront or opting for the smaller annual property tax;
  • Enable people who opt-in to the system to also eliminate any land tax liability;
  • Ensure that the current property owners who are not buying or selling are not affected;
  • Replace the current stamp duty concessions provided to first home buyers with a new grant; and
  • The proposed model includes a property tax rate that would support and incentivise home ownership with a lower rate for owner-occupiers and higher rates for investors and commercial properties.

Further information available here.

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