Today, the Treasurer of NSW the Hon. Dominic Perrottet MP, released NSW’s much anticipated state budget for 2020-21.
In a year when the NSW government provided almost $6.4 billion in tax relief, and more than $860 million in grants; the budget is firmly focused on further economic stimulus, with economic reforms being a longer-term objective.
- Payroll tax cuts for most businesses
- $1,500 voucher to smaller businesses
- Payroll tax relief for businesses expanding their NSW workforce
As part of the Covid-19 measures the NSW government previously increased the payroll tax threshold to $1 million. Today Perrotte, announced that the threshold will be further increased to $1.2M.
Additionally, the payroll tax rate will be temporarily cut from 5.45 per cent to 4.85 per cent for the next two years (2020-21 and 2021-22).
These changes will take many small and medium businesses out of the payroll tax system and reduce the payroll tax burden on those businesses that continue to be subject to payroll tax.
However, even with the increased threshold and reduced tax rate, businesses should ensure that they have fully considered their potential payroll tax position. Issues such as the treatment of contractors, grouping of related employers and the impact of wages paid in other states regularly arise as part of NSW Revenue reviews.
Small and medium size businesses, which do not pay payroll tax, will be provided with a $1,500 digital voucher that can be applied towards the cost of government fees and charges.
The Jobs Plus Program aims to create or support 25,000 jobs between 15 December 2020 and 30 June 2022. Businesses that create (net) at least 30 new jobs in NSW will be eligible for payroll tax relief for up to a four-year period. This can be accessed by existing businesses in NSW that increase their employment footprint, or businesses that relocate operations to NSW from interstate or overseas.
As a longer-term objective, the NSW government has signalled an intention to reform the property tax system which it describes as “inefficient”. The next step will involve seeking public feedback on a possible transition away from the current transfer duty and land tax system. The aim is to lower barriers to home ownership, and boost long-term economic growth.
There is a range of infrastructure measures in the budget, including significant infrastructure spending, and a focus on education, retraining and job creation.
For more information on how the NSW budget may affect your business, please contact your William Buck advisor.