The New South Wales government will allow more small businesses to avoid payroll tax by raising the threshold to $1 million over the next four years.
Payroll tax is applied to businesses with salary bills of more than $750,000 annually. It also applies to salaries, superannuation, bonuses and fringe benefits.
As part of the state’s 2018-19 budget, the tax-free threshold will increase to $850,000 starting 1 July, and will rise by another $50,000 each year until it reaches $1 million in the 2021-22 financial year.
The state government expects nearly 40,000 small businesses to save an average of $5450 each.
NSW minister for small business John Barilaro said the new threshold would help small businesses save a total of $881 million over the next four years.
“As a former small business operator myself, I know how tough it can be to run a small business, and so now as minister responsible for the sector, I want to make life as easy as possible for those people who take on the responsibility of running a business and creating work opportunities for others,” he said.
“The lifting of the payroll tax threshold will not only save business owners money, it will save them time and give them the opportunity to take on that extra staff member, or pursue new ideas to grow their business.”
The government also expects that another 5000 businesses will be completely exempt from paying payroll tax altogether by 2021-22.
By comparison, South Australia has the lowest payroll tax threshold at $600,000 annually, while the Australian Capital Territory has the highest at $2 million.
In addition to raising the payroll tax threshold, the NSW government has pledged $7.1 million over four years for civil justice initiatives, which is said would provide a more responsive and effective civil justice system to help small businesses resolve court matters more quickly, and to alleviate pressure on courts.