![Abolition of stamp duty for ACT commercial properties under $1.5m should not lead to more taxes, agents say](https://res.akamaized.net/domain/image/fetch/t_web/https://static.domain.com.au/cre/production/2018/06/canberra-parlthouse.jpg)
Abolition of stamp duty for ACT commercial properties under $1.5m should not lead to more taxes, agents say
Canberra property experts are adopting a wait-and-see approach on the effectiveness of the ACT government’s decision to dump stamp duty for commercial properties under $1.5 million from July 1.
This is despite the fact that this measure will save investors or owner occupiers upfront costs of more than $70,000.
The caution by some experts is driven by what they see is the government replacing stamp duty with a hike in other rates, taxes, charges and levies that could leave buyers no better off.
The ACT executive director of the Property Council of Australia, Adina Cirson, said the council had been carefully watching the progress of overall tax reform within the jurisdiction, as had the rest of the country.
“Everyone is keen to see how it works. We’re supportive, but we are keen to see that tax reform is genuine and that it should be revenue neutral,” she said.
“We understand there will be ongoing annual increases in rates and other charges, but there should be an overall benefit to owners or investors.”
It is understood the ACT government is to increase commercial rates alone by 11 per cent in the next financial year.
But Andrew Smith, director of Civium Property Group, said the reduction in stamp duty would still come as a welcome relief to many commercial property investors.
“The main benefit is that it will help buyers acquire these investments with a lower level of equity,” he said.
Mr Smith said the dumping of stamp duty would likely cause a small increase in prices for these types of assets and could attract interstate investors into the Canberra market.
“But we don’t see the absence of stamp duty as encouraging speculative building of smaller commercial properties,” he said.
“It may, however, result in developers breaking strata-titled developments into units with a price point below $1.5 million.”
Colliers International manager of investment services, Matthew Winter, said there were pros and cons to businesses owning their own office or shopfront and one of those cons had been stamp duty.
“But what this (abolition of stamp duty) does is give them more choice,” he said.
Before July 2017, the conveyance duty on a commercial property of $1.45 million would have been $73,710; this fell to $35,550 from July 1, 2017, and will become zero from July 1.
“This is a significant upfront cost for a small business trying to manage its cashflow,” Mr Winter said.
“Removing this expense could mean a small business operator who previously thought owning their own premise was completely out of reach could now seriously consider this option.”
A government spokeswoman confirmed that the revenue lost from the scrapping of stamp duty and other taxes would be made up by increasing general rates.
“The objective of the tax reform program is to be revenue neutral in aggregate over the lifetime of the tax reform process,” she said.
“The taxes being abolished are widely recognised as being inefficient, unfair, and can hinder economic growth and activity. Stamp duty is also a volatile revenue source which can vary significantly from year to year.”
Its abolition, which would affect about 70 per cent of all commercial property transactions, would promote investment in the ACT, the spokeswoman said.
“Stamp duty is more of an impediment to investment and has a greater influence on business decisions for small and medium enterprises.”