Australia

Details

  • Service: Tax, Indirect Tax
  • Type: Regulatory update
  • Date: 15/05/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Matthew Stutsel

Matthew Stutsel
Partner, Tax

+61 2 9455 9094

mstutsel@kpmg.com.au

State: Your case 

by Matthew Stutsel, Indirect Tax Specialist

What is the best state in which to do business from a state tax perspective? I was asked to answer that question at a conference last week in New Zealand. My response: 'It depends'.

Various organisations comment on the impact of state taxes on business. Typically, they pick a reference model for a notional business and then calculate the state tax impact for that model. While this approach shows some interesting information, it does ignore 2 critical issues: when you’re asking that question it is in the context of your real business operating in a real economy.

 

From the perspective of payroll tax, the states are much of a muchness. The provisions are largely harmonised across the country and there is relatively little difference between the rates in the major jurisdictions (even with Victoria dropping its rate by 0.05 percent last week).

 

By contrast, land tax is much less harmonised. The only real outlier is the Northern Territory, which does not charge land tax. Even in the Australian Capital Territory (ACT), the amount previously collected as land tax on commercial premises is now raised as council rates. Despite other differences, few clients focus on land tax (for a variety of reasons).

 

The differences in stamp duty implications are even greater. It makes me laugh when I think that the states were talking about the Rewrite harmonisation project when I started working in the area. The states that still have share transfer duty; those that 'look through' unit trusts; limits on corporate reconstruction relief (or even its absence); the retention of duty on business assets such as goodwill and intellectual property: there’s a lot to consider.

 

Contact me for a copy of my paper or to discuss which state might be best in your case.

 

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