South Australia Treasurer, Stephen Mullighan, has handed down the 2024-25 South Australian State Budget. The police force, educational institutions, regional areas, and families and seniors concerned with the cost of living are all set to benefit from significant investment. First-home buyers will once again ‘win’, with the abolishment of the stamp duty exemption threshold when purchasing a new home, apartment, or land. This builds on last year’s measure of removing stamp duty for first-home buyers purchasing property under $650,000.

The business community also saw some funding, with grants between $2,500 and $50,000 made available for small business owners to invest in energy-efficient equipment and reduce and manage their energy use and costs.

While this year’s budget contained minimal significant tax reform, pre-budget announcements included the move to make bulk-billing payments to medical practitioners in medical centres payroll tax exempt. This follows last year’s payroll tax rulings which would have made receiving doctor care more expensive for most patients, and goes against the cost-of-living focussed initiatives announced.

Stamp Duty Relief expanded for First Home Owners

In the 2023-24 budget, the government abolished stamp duty in respect of the purchase of a property after 15 June 2023 for a first home owner:

• Purchases of new housing valued up to $650,000, and progressively phased out up to $700,000; and
• Purchases of new land upon which a new home will be built up to $400,000, and progressively phased out up to $450,000.

In the 2024-25 budget, the South Australian government will abolish stamp duty for a first-home buyer purchasing any new home, including a flat or unit from 6 June 2024. This will include unsold and unused existing stock, and also removes the value cap on eligibility for the $15,000 first home owner grant.

The abolition of stamp duty for first home buyers is aimed to encourage young South Australians to access the housing market, whilst encouraging new supply, designed to control rising house prices.

Payroll tax exemption on bulk billing

Following case law in Victoria and New South Wales, and a ruling issued by the Queensland Revenue Office, medical practices are liable to pay payroll tax on payments made to contracted general practitioners (GPs) in South Australia unless a contractor exemption applies. There was a genuine lack of awareness of the payroll tax treatment of contractors among GPs and Medical Centres, and therefore the South Australian Government provided a payroll tax amnesty on payments made to GPs until 30 June 2024. The South Australian Government released guidance on the issue in Revenue Ruling PTA041 on 22 November 2023.

On 22 May 2024, the South Australian Government announced that from 1 July 2024, it will exempt wages earned by GPs, whether or not they are considered employees or contractors for payroll tax purposes, for bulk billed services provided to patients.

The exemption will be calculated based upon the proportion of bulk billed items relative to the total number of billed items by GPs. This percentage deduction will then be applied against the medical practices total annual GP wages bill.

For example, if the GPs in a medical centre bulk bill a combined 40% of services they provide, an equivalent percentage deduction will be applied to the total GP wages before a payroll tax liability will be calculated.

A payroll tax liability imposed on GPs has the potential to increase the cost of healthcare at a time when the cost of living is having a large impact on family budgets. This measure is intended to address this issue while also encouraging GPs to provide bulk billing services to patients.

The government were not able to provide an estimate of the impact of this announcement in their budget papers.

Small Business Energy Grant

In what is expected to be available from August 2024, eligible small businesses entities that consume less than 160MWh of electricity per year will be able to apply for a grant ranging from $2,000 - $50,000. Applicants will need to provide at least a 50 per cent co-contribution towards the cost of their project.

The measure is designed to encourage investment in energy efficient equipment or other improvements processes to reduce or manage energy usage.

How BDO can help

If are you interested in expert commentary around tax changes, subscribe to receive our expert insights or contact BDO’s team of specialists in South Australia to discuss our tax services.