This week I received an email from Federal Finance Minister Mathias Corman promoting the Liberals’ “tax relief supporting 3.2 million small and medium businesses”.
That may be right federally, but any relief is undone in NSW where the State Government is adding new taxes to the already punishing State Land Tax. This was my reply:
Dear Mr Cormann,
Thank you for your email.
I congratulate you on your efforts to encouraging/promoting small business, however, State taxes seriously impact small business operations. Although deductible against Federal tax liability, they are a major cause of small business failure. For example:
- Commercial leases pass statutory charges and services costs to the lessee.
- In 2017, NSW will have four land taxes, all potentially loaded into small business rent.They are:
- State Land Tax (SLT) — imposed on business and rental housing, and designed to maximise SLT upon small business and rental housing need of a Freehold site.
- Local Government Land Tax (Rates) a catch-all. (Not tax deductible on the Family Home)
- Emergency Services Levy (ESL) Commencing July 2017 and said to fund SES, and Fire Services— Emergency Services. (Also not tax deductible on the Family Home)
- Foreign investors and owners are also liable for an additional SLT @ 0.7% on total land value.
Politicians at Local, State and Federal levels constantly advise of crises in Housing affordability and in rental Housing. However, data from the NSW Treasury discloses that in 2016: NSW SLT from 163,601 rental residential properties was $898,219,000. From 76,968 rental residential properties in regional NSW SLT was $117,970,000.
It is not generally appreciated how SLT is designed to impact small business, and exclusively rental housing that both require a Freehold site.
The above data raises the question: how? How does NSW SLT policy assist Small Business and housing affordability.
I would be most grateful to receive your response.
Yours sincerely,
Mike Danzey