State Government Still Taxing Taxes

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6th October 2010, 11:57am - Views: 1276





Misc Miscellaneous REIV 1 image

Misc Miscellaneous REIV 2 image




Media Release 



The Real Estate Institute of Victoria Ltd

Telephone (03) 9205 6666

ABN 81 004 210 897





      



Wednesday 6 October 2010


State government still taxing taxes


The REIV has called on both the State and Federal Governments to remove the tax on tax rort of

stamp duty being levied on GST in commercial real estate transactions.


When the GST was introduced in 2000 it created an anomaly in which state property taxes – stamp

duties – were being charged not just on the actual cost of the property but also on the GST paid.


REIV CEO Enzo Raimondo said “the GST is a tax on goods and services; it was not intended to be a  

tax on tax.


“There is no rational reason why this is the case, it is an anomaly that adds unnecessary costs to

commercial and industrial property transactions.


“As it stands, commercial and industrial properties are subject to state-based land taxes, the GST,

stamp duty and stamp duty on GST!


“This anomaly was first raised 1999, prior to the introduction of the GST and 10 years later nothing

has been done by either the State or Federal Government to remove this anomaly.


“This year’s state election and 2011 Federal Tax Summit provide an opportunity to have this issue

addressed.


“There is really only one acceptable outcome: stamp duty should only be levied on the actual

purchase price and not on the GST. This anomaly must be removed,” Mr Raimondo concluded.


Example



Purchaser buys vacant and unleased office block for $2,000,000. 



The federal government levies $200,000 in GST, resulting in a total transaction cost of

$2,200,000. 



This creates a stamp duty liability of $121,000 and a total transaction cost of $2,321,000.



Of this, $200,000 is claimable as an input credit, resulting in a net cost of $2,121,000.



If the stamp duty were not levied on GST, the net cost of the transaction – due to lower stamp

duty – would be $2,111,000. 



The fact that stamp duty is charged on GST means that the state government gets an extra

$10,000 that it would not otherwise receive. 




MEDIA COMMENT:

Robert Larocca, 9205 6622 or 0409 198 350






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