The controversial changes to South Australia's land tax have been given the go-ahead by the state parliament, delivering tax cuts to investors.
The reform package includes a $189m in tax cuts for investors over three years and tax relief for thousands of "mum and dad" investors.
The Land Tax Amendment Bill 2019 slashes the top land tax rate from a national high of 3.7% to 2.4%. While this new rate is still higher than those in New South Wales and Victoria, it is lower than those in Western Australia and Queensland.
Treasurer Rob Lucas said these reforms will deliver a "more competitive, investment-attracting environment" to the state and will boost jobs and economic growth.
"This is a once-in-a-generation opportunity for significant land tax reform that will benefit South Australians now and into the future. We see this as a big investment attractor and job creator" he said.
The changes were first introduced during the state budget in June, but the initial proposals were met with criticisms by business groups and investors.
After revamping the changes several times, the new measures won the support of both houses.
However, Lucas said the government refuses to compromise on its objectives to introduce changes to aggregation rules. As such, investors will not be able to use separate trust and company structures to avoid paying tax.
"This means that no longer will it be possible for an investor to hold $3m in property in seven separate companies and not pay a single dollar in land tax," Lucas said.
The tax reform will also include a $25m transition fund over the next three years for investors who might be hit by the changes. The changes will take effect starting in July next year.
Property Council executive director for SA Daniel Gannon said the state now "boasts a more competitive land tax regime" that is compelling for investors.
"This state's anti-competitive land tax rates and low thresholds have long discouraged investors from looking to invest here. In terms of the residential environment, South Australia's median house price starts with a 'four' rather than ending in 'million' — this means we have a more affordable entry point for investors now combined with a more competitive set of rates and thresholds," he told The Australian Financial Review.
