The New South Wales Government has cut payroll tax rates by 0.6 percentage points and expects more businesses will be exempt following a decision to lift the threshold by $200,000.
As part of the budget for Australia's most populous state, Treasurer Dominic Perrottet has announced a payroll tax rate cut from 5.45 per cent to 4.85 per cent for a two-year period, which will be backdated to 1 July this year.
There will also be a retrospective lift in the threshold from $1 million to $1.2 million, meaning an estimated 3,500 additional businesses won't need to pay payroll tax in FY21.
This compares to around 5,000 businesses that are exempt from paying payroll tax following a decision in 2017 to increase the threshold from $750,000 to $1 million.
The State Government believes businesses liable for payroll tax could save around $34,000 a year over the next two years, which could be reinvested into additional staff given the median part-time wage equivalent in NSW is about $29,500.
"This is a budget that looks to the future, and the significant payroll tax relief announced today will be a real boon to businesses that have faced the triple crises of drought, bushfire and now COVID-19," Treasurer Perrottet (pictured) said today.
"Our $2.8 billion budget measure will pave the way for thousands of jobs across the state and kick-start the state's dynamic recovery, cementing us as the economic engine room of the nation."
He highlighted businesses were the backbone of the NSW economy, claiming that by making it easier to run a business the government is driving recovery and bringing back jobs.
"This is a significant change, with these tax savings set to have a major impact, encouraging employers to offer increased working hours to staff, or hire additional workers," he said.
Minister for Finance and Small Business, Damien Tudehope, said the decision to increase the payroll tax threshold to $1.2 million was a progressive step forward.
"The payroll tax cut means NSW will now have the equal to the lowest headline rate of payroll tax payable by businesses in any metropolitan area across Australia," Tudehope said.
"The rate reduction will be applied retrospectively, from 1 July 2020, meaning the tax benefits will start flowing immediately.
"While businesses will be entitled to a refund as a result of the rate cut, they also have the option to offset this amount against their future monthly payments."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia