NSW State Budget 2023-2024

State Tax Measures

• On the back of a recent politically sensitive increase in Queensland, the coal royalty rates in NSW will increase by 2.6% from 1 July 2024.  This is forecast to add $2.7 billion of additional revenue to the budget over the four years to 2028.
• A change to the corporate reconstruction exemption for transfer duty will apply from 1 February 2024.  Under the change, eligible transactions will no longer be fully exempt from duty.  Rather, duty will be charged at 10% of the duty that would otherwise be payable in the absence of the exemption.  This is a similar measure to one previously introduced in Victoria.  Any groups with material NSW assets who are contemplating a restructure are urged to expedite that process to ensure that the restructure can be achieved without any duty impost.
• From 1 January 2024 the stamp duty exemption for certain electric and hydrogen fuel cell vehicles will cease.
• A change to the way landholder duty is applied to trusts will apply from 1 February 2024.  Duty will apply where a person acquires a “significant interest” in a “private unit trust scheme” that owns land in NSW worth $2 million or more. Under this change, the threshold for the acquisition of a “significant interest” will in a private unit trust scheme will reduce from the current 50% to 20%.  This proposed measure will not impact the acquisition threshold for a public unit trust which will remain at 90%.
• A carve out for the above acquisition threshold for unit trusts has also been introduced.  Under this exemption a private unit trust scheme that is registered with the Chief Commissioner will be excluded as a “private unit trust scheme” meaning the acquisition threshold for such trusts remains at 50%. The Chief Commissioner may register a unit trust scheme where:
  • the unit trust scheme is a “wholesale unit trust scheme” (or will be within 12 months); and
  • the registration is not being sought for a purpose of avoiding or reducing duty.

• Increases to duty rates have also been proposed for certain transactions attracting fixed or nominal duty.  These nominal duty rates have generally doubled with the exception of stamping of managed investment scheme instruments where there is a ten-fold increase from $50 to $500 and stamping of declarations of trust over dutiable property where there is a 50% increase from $500 to $750.
• Land tax changes have also been proposed to strengthen the access to the principal place of residence exemption.  Under this measure, individuals who use and occupy land as a principal place of residence will need to have a minimum 25% interest on the property to claim the exemption. For anyone that is currently claiming the exemption that will fall under the 25% threshold, the exemption may still be claimed for the 2024 and 2025 land tax years but will be subject to the 25% threshold in the 2026 year unless they are over the 25% threshold by 31 December 2025.

Essential Services Measures

• A new $3.6 billion Essential Services Fund will be established to enable the Government to improve services by shoring up workplace participation.  This will see money set aside to ensure there is an increase in teachers entering the workforce, nurses and midwives are attracted into the system and sufficient bus drivers exist.  The focus of the fund is to commit to a new bargaining framework, using the funds set aside to support public service improvements and deliver higher wages for essential workers.
• Specifically for essential health services, the Government has committed $2.5 billion to recruit and retain healthcare workers, including an additional 1,200 nurses and shoring up 1,112 nurses and midwives whose positions were only temporarily funded to June 2024.  In addition, 500 new paramedics will be delivered to regional and rural areas.  Other features are a new study subsidy for healthcare students with potential scholarships of $4,000 per year and salary packaging benefits for more than 50,000 healthcare workers.
• An essential infrastructure plan has been developed with an investment of $13.8 billion in health facilities including 600 new hospital beds across Western Sydney.  The plan also provides for new, expanded and upgraded hospitals and other health facilities greater Sydney and regional NSW. 
• $9.8 billion has been committed to increase investment in the public education system, including 24 new and 51 upgraded schools in Western Sydney, 19 new and 25 upgraded schools in regional NSW and 1,000 extra apprentices across the NSW Government.
• Investments of $72.3 billion to deliver new and improved transport infrastructure, including $1 billion to kick start the Sydney Metro City and Southwest project, $7.9 billion for the Sydney Metro-Western Sydney Airport project and $2.4 billion for Western Sydney Roads.

Cost of Living Measures

• Rental reforms, including the appointment of a NSW Rental Commissioner who will work with Government to design and implement changes to make renting in NSW fairer, more affordable and more secure.  In addition, changes such as implementing a Portable Rental Bonds Scheme, legislating to protect renters from unfair evictions and a $60 million investment to support new Build to Rent trials in the South Coast and Northern Rivers.
• Expanding the First Home Buyers Assistance Scheme with a stamp duty exemption for purchases up to $800,000 and a concession for purchases between $800,000 and $1 million.  It is estimated that these concessions will assist around 84% of first home buyers who buy in the range of $1 million or less.
• $700 million set aside for the construction of thousands of new dwellings and the delivery of infrastructure that can unlock new housing across the state.
• An Essential Housing Package announced, establishing Homes NSW to deliver better outcomes for public and social housing tenants, more affordable and social housing and reducing the number of homeless people in NSW.
• Expansion of energy price relief, including increasing the Family Energy Rebate to $250, increasing the Seniors Energy Rebate to $250, increasing the Low-Income Household Rebate and Medical Energy Rebate to $350 and increasing the availability of the Life Support Rebate by extending the threshold for eligible equipment to $1,639.
• $263 million has been allocated to support an efficient and equitable roll out of electric vehicles (EVs), including an expansion of EV infrastructure which has been seen as a significant barrier to the take up of EVs.
• Toll relief, including a $60 weekly toll cap for private motorists from 1 January 2024 and a 33% reduction in the truck toll multiplier on the M5 East and M8. Investment is also being made in an independent review of Sydney’s motorway network, focused on ways to enhance the city’s road network without the need for privatisation of assets.
• Preschool investment of $5 billion aimed at increasing the number of available places for preschool and reducing the prices, a trial of $500 per year savings for parents through preschool fee relief for 3 year old children in long day care, $4,220 per year in fee relief for 3 to 5 year olds in community and mobile preschools and $2,110 in fee relief for children aged 4 years and older attending preschool in long day care centres. 

Measures Relating to Agricultural / Regional Industries and Natural Resources

• The appointment of an independent Agriculture Commissioner to provide more protection for NSW farmland, ensure food security and a more prosperous agricultural industry.
• Assistance to Landcare to address environmental degradation with interventions that improve and sustain agricultural productivity, environmental protection, resilience to natural disasters and community vitality.
• Partnership with the Federal Government to support sheep and goat farmers to implement mandatory individual electronic identification across NSW which helps to provide traceability and protect producers from biosecurity risks.
• Investment into the Farm Business Resilience Program to help farms to prepare for and adapt to climate change.
• $142 million to be invested across the Natural Resources portfolio across a new and updated Critical Minerals and High-Tech Metals Strategy to support NSW to create more local jobs by encouraging domestic processing and manufacturing of products with critical mineral inputs.  This also includes $27 million set aside for geological work using cutting-edge techniques to deliver data to help define areas of mineral or energy resource potential to encourage and help participants focus on exploration of critical minerals across NSW.