David Sofrà and Ric Samartgis, People Advisory, look at the biggest changes for employers in the 2017-18 Victorian State Budget.
With the release of the Victorian Government’s budget for 2017/18 on 2 May 2017, the accompanying tagline, “getting on with the job”, can be read somewhat literally. A number of key changes and new measures have been announced that will lead to an overall payroll tax cut of $221 million, enabling Victorian employers to focus on their core business activities.
The biggest change is the announcement of a 25 percent reduction in the rate of payroll tax payable (to 3.65 percent) from 1 July 2017, for businesses who employ at least 85 percent of their workforce in regional and rural Victoria. This is estimated to ease the payroll tax burden on up to 4,000 businesses.
The payroll tax wage threshold (below which no payroll tax is payable by an employer) has also been bumped up across the state from $575,000 to $625,000 from 1 July 2017, with the threshold set to rise again to $650,000 from 1 July 2018. This increase has been fast-tracked by the Andrews Government to benefit all 37,800 payroll tax paying employers in Victoria.
Smaller businesses have not been forgotten either. From 1 July 2017, businesses whose annual payroll tax liability is $40,000 or less can opt to lodge and pay in one annual instalment, doing away with the administrative burden of having to lodge monthly returns. This threshold is up from only $10,000 at present, and is said to impact 9,700 Victorian small businesses.
Finally, it is prudent to note that running parallel with these new measures is an increase in funding for State Revenue Office compliance activity. This is set to reinvigorate the authorities as they tackle the traditional payroll tax risk areas of unregistered employers, contractor payments, employer grouping, employee share scheme reporting, and fringe benefits reporting.
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