Additionally, in a clear effort by the state government not to penalise motorists who either plan for a low-emission passenger car or for those owned by primary producers, from July 1 the Victorian government will reduce the duty on these vehicles if they are valued above the state’s newly imposed luxury car tax threshold of $100,000.

In the case of low-emission vehicles, they are categorised as having carbon dioxide emissions of less than 120g/km.

These vehicles will be charged a duty of $8.40 per $200 of market value.

Meanwhile, the Victorian Automobile Chamber of Commerce (VACC) has been successful in its discussions with the government on dealer concessions, and from July 1 dealers will be able to claim duty exemption on cars used as service loan vehicles.

The move is a win for the VACC and the Victorian Automobile Dealers Association (VADA) which lobbied extensively for the change.

“Well done to VADA on staying the course with this issue and thanks also to Deloitte and ShineWing for expert professional advice,” Mr Gwilym said.

“Service demonstrator vehicles are those lent by dealers to customers while their vehicle is being serviced or repaired, and these vehicles should never have attracted duty in the first place.”

Dealers carrying on the business of wholesale or retail dealings in motor vehicles will also, from July 1, be entitled to a duty exemption when purchasing trading stock and/or demonstrator vehicles used predominantly for either or both of these purposes.

“So, from July 1, a dealer will also be entitled to an exemption on service demonstrator vehicles satisfying similar criteria,” Mr Gwilym said.

“We are disappointed the request for duty exemption for aftermarket and accessories has not come to fruition. This issue will remain firmly on our agenda.”

Mr Gwilym said there was “rarely a ‘perfect’ budget”.

“But VACC thanks treasurer Pallas and the Victorian state government for addressing the area of service demonstrator vehicle exemptions, which was VACC’s number-one lobbying activity for the members of its Victorian Automobile Dealers Association.

“On behalf of our dealer members, we look forward to addressing other areas in the Duties Act that are in need of modernisation.”

Commenting on the heavily criticised aspects of the budgets, including the state’s own luxury car tax which will be applied in addition to the federal government’s LCT, Mr Gwilym said: “While VACC never advocates for the lifting of motor vehicle duty rates, the automotive industry understands the government’s predicament.

“However, we will continue to monitor thresholds and seek opportunities to reduce red tape issues, which should lead to productivity gains.”

In other Victorian state budget 2019/20 news:

Payroll tax

• Starting July 1, the regional payroll tax rate will be reduced by 0.4 per cent each year over the next three years, reaching 1.2125 per cent by 2022/23. The eligibility rules for the regional rate will also be simplified by removing the ‘business location test’.
• From July 1, a payroll tax exemption for wages paid to employees on maternity leave will be extended to all types of parental leave for up to 14 weeks of wages.
• The current payroll tax-free threshold of $650,000 will be increased to $700,000 by 2022/23, with increases of $25,000 from July 1, 2021, and a further $25,000 from July 1, 2022.
• A land transfer duty concession is now available on commercial and industrial property transactions in regional Victoria. A 10 per cent concession for contracts signed from July 1 will be provided, increasing by 10 per cent each year to a full 50 per cent discount from July 1, 2023.

By Neil Dowling