In brief
The 2026-27 New South Wales (NSW) Budget was delivered on 23 June 2026 by Treasurer Daniel Mookhey. The Treasurer described the Budget’s purpose as ‘building a state working Australians can afford’, through relief and reform to secure NSW’s path to long-term growth and meet the challenges of the future.
The Budget included stamp duty concessions applicable from 1 July 2026 for foreign purchasers of operational build-to-rent properties and retirement villages, and foreign developers of retirement villages, with the Revenue and Other Legislation Amendment Bill 2026 being introduced to the NSW Parliament to effect these changes when enacted.
In detail
State finances
The NSW Government anticipates total revenue of $130.7bn in 2026-27, and this is expected to grow to $146.1bn by 2029-30. Of this, tax revenue in the general government sector is forecast to be $52.1bn in 2026-27, and $60.7bn by 2029-30.
The forward estimates of revenue are higher than previously forecasted due to increased Commonwealth funding (through a higher forecast of NSW’s share of the national GST pool and National Health Reform Agreement Addendum payments), increased revenue from investment fund distributions and an uplift in returns from OneFund, and a one-off increase in 2027-28 associated with the recognition of NSW Rural Fire Service fleet assets transferred from local councils. This is partially offset by ‘lower transfer duty and land tax revenue reflecting a weaker outlook for the property market following a material shift in the cash rate pathway since the 2025-26 Half-Yearly Review’. Taxation revenue has been revised down by $7.1bn over the four years to 2029-30, with transfer duty and land tax revenue in particular revised down by $8.4bn over that period.
Total general government and non-financial public sector expenditure is expected to be $133bn in 2026-27 and $144.2bn in 2029-30. Accordingly, the Budget projects a deficit of $2.3bn for 2026-27 (down from $3bn in 2025-26), with a return to surplus from 2027-28.
As of June 2025, the net debt of the general government sector as a proportion against Gross State Product (GSP) was 12.3%. This ratio is effectively a measure of the State’s debt relative to the size of the economy and provides an indication of the State’s ability to service its debt. The Budget projects net debt to be $129.3bn by June 2027 (13.7% of GSP) and $144.8bn by June 2030 (13.5% of GSP).
The fiscal measures in the Budget are described as a ‘measured approach to financial management’ guided by a fiscal strategy of returning to a sustainable operating position while stabilising and maintaining NSW’s debt position. A surplus of $1.1bn is forecasted from 2027−28 despite higher interest rates, persistent inflationary pressures, decline in property tax (e.g. stamp duty and land tax) revenues, and increased co-funding obligations with the Commonwealth.
At a broad level, the Budget focuses on measures to address:
- Housing and Planning – investing $5.2bn for major water infrastructure projects to enable housing across Western Sydney, $32.3m to construction and planning sectors, as well as expansion of the $1.0bn ‘Pre-Sale Finance Guarantee’ scheme and funding for faster planning approvals supporting housing delivery.
- First Nations – investing $154.2m to improve outcomes for First Nations people, including $45.3m to support Closing the Gap commitments, $96.7m to improve land, water and housing outcomes and $12.2m to support First Nations economic, cultural and social outcomes.
- Businesses and Jobs – legislating workers compensation reforms and investing $20.8m for the Industrial Relations Commission to resolve disputes faster. $225m to support manufacturing for emerging low-carbon industries, and a new Local Jobs First Commission to prioritise local workers and businesses in government procurement.
- Energy and Climate Change – through $480m in interest-free loans and $77.1m in discounts under the Home Energy Saver program, and $7.2m for energy efficiency upgrades. Regional corridor upgrades to support transportation to renewable energy zones and support the transition to net zero.
- Education – funding of $9.2bn to support the delivery of new and upgraded schools in priority growth areas, extension of the 3-Year-Old Fee Relief in Long Day Care to the end of 2027 for $42.6m, and investment of $3.4bn in skills and TAFE.
- Transport – $100 off car registration ($80 for motorcycles), a $50 toll cap, an Opal fare freeze at 2025 prices and $2.6m to upgrade FuelCheck. Investment in the Parramatta Light Rail, electric buses and improved road safety.
The key measures are set out in further detail below.
Tax measures announced in the Budget Papers
Stamp duty foreign surcharge concessions for build-to-rent (BTR) properties and retirement villages
From 1 July 2026, the Budget introduces concessions to the foreign purchaser duty surcharge for foreign purchasers of BTR properties and retirement villages, by way of an exemption and refund of the surcharge purchaser duty already paid. The refund may be the full amount of surcharge paid or partial. A taxpayer may apply for a refund before satisfying the operating period requirements, where Revenue NSW is satisfied on application that the refund criteria are likely to be met. The measure builds on the existing BTR concession, under which eligible new developments already receive a 50% reduction in assessed land value for land tax purposes, together with an exemption or refund of surcharge purchaser duty and surcharge land tax where conditions are met. The new relief extends concessional treatment to operational BTR properties and retirement villages, rather than only to the development of new BTR properties. The measures may apply to transfers entered into from 1 July 2026, provided they are not made in conformity with an agreement for sale or transfer entered into prior to that date.
The concessions will apply to foreign purchasers of:
- Operational BTR properties, where the BTR land tax concession (a 50% reduction in assessed land value) applied to the relevant land in the land tax year in which the property transfer was completed. This requires that the relevant land was used and occupied as a BTR property on the 31 December immediately preceding the transfer. The relevant land must also retain the BTR land tax concession for the subsequent five land tax years, or until the relevant land is transferred to another person if earlier. The example provided in the Revenue and Other Legislation Amendment Bill 2026 which introduces the changes is as follows:
For a transfer occurring on 1 September 2026, the operating period is from the start of 1 January 2027 to the end of 31 December 2031. If a subsequent transfer to another person were to occur on or before 31 December 2031, the operating period would end on the date of the subsequent transfer.
The operating period requirement can effectively be extended by two land tax years where necessary building, remedial or other work is required to be undertaken after the transfer, as a result of which the relevant land is not eligible for the BTR land tax concession.
Relevantly, the 'no subdivision' restriction continues to apply. If the relevant land is subdivided, or its ownership is otherwise divided, within 15 years after the BTR land tax concession first applies to the land, the refund entitlement is terminated, and surcharge purchaser duty becomes payable. The duty will be assessed or reassessed as if the refund had never applied, with the liability deemed to have arisen on the date of the subdivision or division of ownership.
Operational retirement villages, where at the time of transfer there was, wholly on the relevant land, a retirement village (as defined in the Retirement Villages Act 1999 (NSW)) with at least 50 dwellings, and that retirement village has operated for a period of five years from the time of transfer or until the relevant land is transferred to another person prior to the five-year period.
Similarly, periods where necessary building, remedial or other work is required to be undertaken after the transfer does not count towards the operating period, and the requirement can effectively be extended by up to two years – e.g. where a transfer occurs and the retirement village is not operational due to remedial works for 1.5 years, the operating period requirement is not expected to be met until the relevant land has been held for 6.5 years (i.e. 5 years operational and 1.5 years non-operational).
The concessions will also apply to foreign but Australian-based developers of retirement villages, where after the time of transfer of the relevant land, the developer constructs a retirement village with at least 50 dwellings or constructs an additional 50 dwellings to an operational retirement village. Whilst the retirement village or part of it is required to be situated on the relevant land subject to the concession, the 50 dwellings do not have to be on the relevant land which could provide flexibility on the placement of dwellings where multiple lots are acquired for development.
The expansion of foreign surcharge purchaser duty concessions from 1 July 2026 is a welcome change, and notably the NSW Government does not project an overall increase to tax expenditures relating to the provision of surcharge purchaser duty exemptions which are estimated at $89m in 2026-27, compared with $99m in 2025-26.
Electric Vehicle Road User Charge
Based on current electric vehicle uptake rates, the Electric Vehicle Road User Charge is expected to commence on 1 July 2027. The NSW Government notes that future revenue may be affected by developments in national road user charging reform.
A similar charge in Victoria was determined by the High Court decision in the Vanderstock case to be unconstitutional as a duty of excise (which may only be imposed by the Commonwealth).
Compliance activity
Funding has been allocated in the Budget for the following compliance activities:
Maintenance of Revenue NSW tax integrity program. Funding is intended to ensure all taxpayers meet their obligations, additional revenue from which is projected to be $696m of tax owed over the four years to 2029-30.
Continued funding ($5m) for increased compliance activities on wagering and gaming operators i.e., for point of consumption tax and gaming machine tax.
Other Budget initiatives
Elsewhere in the Budget, the following investment initiatives (among others) were announced:
Cost-of-living relief: a 12-month Transport Affordability Package totalling $561.4m, including the temporary $50 weekly toll cap reduction from $60, a $100 private vehicle registration discount ($80 discount on registration for motorcycles), $557.1m in interest-free loans and discounts under the Home Energy Saver Program.
Health: a $10.3bn increase in health funding over four years to grow the health workforce by more than 9,000 workers and expand hospital capacity, and continuation of the Bulk-Billing Support Initiative providing payroll tax rebates to medical centres in respect of contractor GP wages that meet specified bulk-billing thresholds.
Housing and planning: establishment of the Development Coordination Authority as a single point of contact for NSW planning matters from 1 July 2026, expansion of the Pre-Sale Finance Guarantee program, and $32.3m for the Building Commission to improve housing productivity.
Skills and education: a $3.44bn investment in skills and TAFE, and extension of the 3-Year-Old Fee Relief Trial Payment in long day care to the end of 2027.
Transport: $6.5bn over ten years for the New Electric Bus Program and $2.4bn for Parramatta Light Rail Stage 2.
Communities: $184.1m for a 50% uplift to six frontline domestic and family violence services, and a $631.9m contribution to the Thriving Kids early intervention program.
First home buyers: continuation of transfer duty exemptions and concessions and a $10,000 First Home Owner Grant for eligible buyers of newly built homes.
The takeaway
The 2026-27 NSW Budget’s key tax changes are welcomed as they provide targeted cost-of-living relief and foreign surcharge purchaser duty reforms. Developers and operators in the build-to-rent and retirement village sector may wish to consider how the new surcharge purchaser duty relief taking effect from 1 July 2026 will apply to their existing and future projects.
Contact us
Ari Esmerian
Partner, State Taxes, PwC Australia
Matthew Sealey
Partner, Financial Advisory - Tax, PwC Australia
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