NSW property transfer tax may affect investment

The recent ‘ad valorem’ tax on property transfers implemented in July 1 that charges a 0.2 percent tax on transfers between $500,000 and $1 million, and 0.25 percent tax on transfers above $1 million was found to fall short of revenue expectations and may deter future investments in New South Wales.

The Property Council of Australia released figures obtained under Freedom of Information laws that reveal the damaging effect of the tax, showing that:
• $9.29 million was collected in the four months from July through October;
• The highest month for revenue was October with $4.45 million collected – well short of the $8 million average monthly forecast.

“NSW needs to learn its lesson – you don’t encourage growth and investment by taxing it into submission,” NSW Executive Director Glenn Byres said.“The preliminary figures that show revenue falling well short of projections give life to industry concerns that the new tax would serve as a brake on investment.”

"The NSW Coalition has committed itself to axing the new tax in a sign it understands the need to build a competitive tax base. The Property Council applauds the Coalition’s decision and calls for the Government to follow suit.”

Byres said new figures contained in a report to Parliament from the Auditor-General undermined the Government’s excuse for introducing the new tax. “The government claimed the additional revenue was needed to underwrite the cost of insuring against property fraud,” Byres added. “The official audit says claims paid during the past financial year fell to just $3.5 million.”