Michelle Bennett, Gary Chiert and Craig Yaxley discuss revenue measures announced in the 2017-18 Western Australian Budget.
On 7 September 2017, the Western Australian (WA) State Treasurer, Ben Wyatt, handed down the WA State Budget for 2017-18.The key revenue highlights from the WA State Budget are explained below.
The WA government continues to be vocal regarding their dissatisfaction with how the Goods and Services Tax (GST) ‘pie’ is carved up, publishing a Fact Sheet (PDF 596KB) (to illustrate that for FY18 WA will:
The budget papers do however anticipate that the proportion of WA revenue sourced from other Commonwealth grants is expected to climb from 32 percent for FY17 to 40 percent by FY 2022.
The WA government has nonetheless taken advantage of the thinking adopted by its cousins on the eastern seaboard with regard to generating revenue – it has now joined Victoria, New South Wales (NSW), Queensland (Qld) and South Australia (SA) in imposing a duty surcharge on foreign purchasers of residential property in WA:
“From 1 January 2019, a 4 percent Foreign Owner Duty Surcharge will apply in Western Australia on purchases of residential property by foreigners, including individuals, corporations and trusts. The surcharge is in addition to transfer duty generally payable on property acquisitions. The surcharge is restricted to residential property but excludes residential developments of ten or more properties, commercial residential property such as hotels, student accommodation and retirement villages, and mixed use properties that are used primarily for commercial purpose.” (Page 79 of Budget Paper 3, PDF 3.35MB)
The Treasurer has indicated that he will continue to consider introducing a State-based major bank levy, similar to the levy announced in SA, if there is no genuine GST reform and no other measures to increase WA’s revenue.
A tiered gold royalty rate with an increase to the maximum rate to 3.75 percent will be introduced from 1 January 2018. The increase from the current 2.5 percent rate will apply when prices exceed $1,200 per ounce. At current prices results in an additional royalty of approximately $20 per ounce. WA Treasurer has noted that as WA imposes gold royalties at the “lower end of rates levied in Australia…this is a modest increase for the industry”. The current exemption for the first 2,500 tonnes will also cease to apply to producers who exceed that threshold from 1 July 2018. These recommendations give effect to recommendation in the 2015 Mineral Royalty Rate Analysis.
The marginal payroll tax rate in WA will increase from 5.5 percent to 6 percent for businesses with a national annual payroll in excess of $100 million and to 6.5 percent for businesses with a national annual payroll in excess of $1.5 billion. This measure is anticipated to affect approximately 1,300 employers and will be in place for a finite period of 5 years from 1 July 2018.
The SA wagering tax has also been a source of inspiration for the introduction of a point of consumption wagering tax which has a target date of 1 January 2019. The tax will be at a rate of 15 percent of net wagering revenue and is to replace all current wagering taxes on all forms of wagering. Work currently being undertaken at a national level through the Council of Federal Financial Relations will inform the final form of the tax and its commencement date. The new tax arrangements are intended to be agnostic as to the nature of the wagering activity and “‘level the playing field’ between online bookmakers and terrestrial bookmakers”. However, compensation for impacts to the funding of the racing industry are anticipated.