Payroll tax is paid by employers, and is levied as a fixed percentage of a NSW business’s wages above the payroll tax threshold. This threshold effectively excludes smaller businesses from payroll tax liability. A wide range of exemptions also apply for institutions such as hospitals, schools, and charities. Consequently, a significant proportion of wages in NSW are not subject to payroll tax.
Payroll tax revenue has historically been reasonably stable and predictable and, other than when rates or thresholds have changed, has grown broadly in line with the NSW economy. Between 2005-06 and 2015-16, payroll tax revenue has provided around 11 per cent to 13 per cent of total NSW Government revenue each year. Payroll tax is administered by the NSW Office of State Revenue and governed by the Payroll Tax Act 2007.
Stamp duties are taxes on transactions, and are generally payable by purchasers. Duty rates are generally set such that transactions of lower value attract lower rates of duty than higher value transactions. Transactions which attract stamp duty include:
- The sale or transfer of land (including improvements), or a declaration of trust over dutiable property;
- The acquisition of a significant interest in an entity which holds land in NSW exceeding a minimum threshold;
- Insurance policy premiums; and
- The acquisition of a motor vehicle, including the purchase of new motor vehicles or the transfer of registration from another person.
Transfer duty concessions are available to first home buyers. In July 2016, surcharge purchaser duty was introduced on the purchase and transfer of residential real estate by foreign persons.
Duty is also payable by insurers on certain types of insurance. Insurance duty rates are generally calculated as a percentage of the premium paid on the insurance, with the percentage varying for different types of insurance.
Stamp duty revenues have historically varied significantly from year to year. The majority of stamp duty revenue arises from real estate transactions. Between 2005‑06 and 2015‑16, total revenue from stamp duties have provided around 11 per cent of total NSW Government revenue.
Mineral royalties are charged by the Crown for the transfer of the right to extract a mineral resource. The rate and base of royalties are different for different minerals. Royalties may be charged as a flat rate per quantity of mineral, or as a percentage of the value of minerals at a specific point in the production process. The majority of mineral royalties paid in NSW relate to coal. Further information on royalties including rates by mineral type is available at the Department of Industry Resources & Energy website.
Royalty revenue can vary significantly from year to year due to sensitivity to mineral prices and exchange rates, which are not within the control of the NSW Government. From 2005-6 to 2015-16, royalties generally provided around 1-2% of total NSW Government revenue each year.
Motor vehicle tax
Fees and taxes are generally payable on the transfer of registration of motor vehicles, as well as annual registration fees. These fees are in addition to the duty payable on motor vehicle ownership transfers and newly established registrations.
Annual fees comprise of a flat registration fee and the Vehicle Weight Tax, which is based on the weight of the vehicle in question and is higher for heavier vehicles. The tax rates are indexed to maintain their real value over time. Revenue from this tax is directed towards expenditure pursuant to the functions of Roads and Maritime Services. These functions generally relate to administering NSW transport legislation, and include traffic management and safety, bus service safety, and the maintenance of road and maritime infrastructure.
Motor vehicle taxes have historically been a relatively stable source of revenue, and between 2005‑06 and 2015‑16 provided in the order of 3% of total NSW Government revenue each year.
Roads and Maritime Services collects registration fees and taxes relating to motor vehicles. Further information is available on the RMS website.
Land tax is levied on the unimproved value of land in NSW. Land tax is payable by the owners of the land as at midnight on 31 December of each year, although exemptions are available in a number of circumstances – most notably, land tax is not applied to principal places of residence, and a tax free threshold ensures that only people with landholdings above a certain value are taxed. This threshold is indexed each year in line with the average increase in land values in NSW.
For land tax purposes, the taxable value of land is calculated as the average unimproved land value over the most recent three years, as determined by the NSW Valuer General. Land tax is then charged as a percentage of the total value of taxable land that a taxpayer owns.
Land tax revenues have historically been a relatively stable source of revenue, and between 2005-06 and 2015-16 provided in the order of around 4% of total NSW Government revenue each year. In July 2016, surcharge land tax was introduced on the holders of residential land by foreign persons which will take effect for the 2017 land tax year.
Gambling and betting tax
A range of taxes apply to the various forms of gambling and betting in NSW. These taxes vary depending on the nature of the gambling, and the types of entity providing gambling services.
Hotels and clubs that operate gaming machines are taxed a percentage of their gaming machine metered profits, where the tax rate increases with the amount of profit in each year. Clubs are generally taxed at lower rates than hotels.
Totalizator betting (where a system is used to allow people to bet on outcomes and to distribute betting revenue to the winning bets) is taxed as a percentage of player losses (i.e. bets placed less payouts). Fixed odds betting (where an operator agrees to pay specified amounts against specified events) and lotteries are taxed in a similar manner, although tax rates may vary. Casinos are taxed according to agreements between the Treasurer and the casino operator.
Between 2016-17 and 2020-21, wagering taxes will be progressively reduced to achieve racing tax parity with Victoria.
Gambling and betting taxes have historically been a relatively stable source of revenue, and between 2005-06 and 2015-16 provided in the order of around 3% of total NSW Government revenue each year.
Gambling taxes are collected by the Office of State Revenue, and administered by Liquor and Gaming NSW and regulated under a number of different pieces of legislation, including the Betting Tax Act 2001; Casino Control Act 1992; Gaming Machines Tax Act 2001; Public Lotteries Act 1996; and the Totalizator Act 1997.