Payroll tax holds small businesses back and Victoria’s regional payroll tax cuts will assist jobs and growth, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says.
Victorian Treasurer, Tim Pallas, announced the payroll tax cut as part of the Victorian 2017-18 Budget this week. The rate of payroll tax will be reduced from 4.85 per cent to 3.65 per cent for regional businesses – the lowest rate in Australia – and the payroll tax-free threshold will increase from $575,000 to $625,000 from 1 July and to $650,000 from 1 July 2018 for all businesses.
Carnell sees the Victorian Government’s payroll tax cut as good news for small businesses in that State because the tax was a significant burden on small business. “This is a big step in the right direction in Victoria, however, the new threshold is still some way below other States, including New South Wales and Queensland,” she says.
Queensland has a payroll tax threshold of $1.1 million and New South Wales’s is $750,000. The Australian Capital Territory has a payroll tax threshold of $2 million.
Carnell is calling on other States and Territories to review their payroll tax arrangements to help remove the regulatory and administrative burden on small businesses.
“As I travel around Australia talking to small-business owners, payroll tax consistently comes up in conversations as one of the key issues holding back businesses,” she says. “I call on other state leaders and treasurers to do all they can to reduce the tax burden and create a system that ensures small businesses have every opportunity to expand their enterprise and hire more staff, create sustainable local economies that contribute to the overall strength of the nation’s bottom line.
“Small businesses are the engine room of the economy, employing the majority of Australians. It is vitally important that governments at all levels support their growth and allow them to get on with the business of running their business and employing more people.”