Victoria’s new stamp duty laws will increase costs for unlisted property funds which will be, in turn, passed on to investors, according to the Property Funds Association (PFA).
The industry body, which represented the $125 billion Australian unlisted wholesale and retail property funds sector, warned that changes which were made to the State Taxation Acts Amendments Act 2019 and which received royal assent on 18 June 2019 had sent “shockwaves through the property industry”.
The issues centred around changes to the ‘economic entitlement provisions’ under the Victorian Duties Act, which included removing the 50 per cent threshold and moving most of the provisions from the ‘landholder duty’ regime into the ‘transfer duty’ regime.
According to the PFA, the removal of this 50 per cent threshold and of the restrictions in the landholder regime would mean a much wider range of entities and activities would be caught up in the stamp duty net.
“PFA believes there needs to be more scope for exclusions or exemptions to ensure funds are able to carry out their business without being unreasonably taxed,” Paul Healy, PFA’s chief executive, said.
He added that there were particular concerns over how the new stamp duty rules would apply to property transactions, and how they would apply to fund performance fees, acquisition fess and disposal fees.
“Victoria’s stamp duty changes have been introduced without consultation and will likely increase costs for unlisted property funds, which may then be passed on to unlisted property investors,“ Healy said.