The Victorian Government recently announced payroll tax relief measures to help small businesses weather the economic impact of the coronavirus (COVID-19) pandemic, joining other state governments around the country. Here's what you need to know about the new measures.
Under the new measure, which is part of the Government’s broader economic survival package, businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived.
Eligible businesses may also be able to defer paying payroll tax for the first quarter of the 2020-21 financial year.
Eligible businesses will need to continue to lodge returns, but do not need to make further payments in the current financial year. They will be contacted directly by the Victorian State Revenue Office in regard to reimbursement for any payroll tax already paid this financial year and can expect to be sent more information about the relief measures directly.
Impact of Victorian payroll tax relief measures
A statement from Victorian Premier Daniel Andrew’s office made it clear that, “This assistance is a refund, not a loan.”
It claimed the tax relief package would include 24,000 Victorian businesses who would receive a total of $550 million in payroll tax refunds.
“This relief is a step in the right direction,” said Simon Tisher, Chair of the Tax Institute’s State Taxes Committee in Victoria.
“A payroll of up to $3 million will certainly include some small to medium size businesses and could provide a refund of up to $145,500 for an ordinary member of a group. I am hopeful it will assist in keeping workers employed in these difficult times.”
“However, one issue to note is that the $3 million taxable wages limit appears to be on Victorian wages only, on a single, per employer basis, not on grouped Australian wages. That could see some members of the payroll group qualify for the relief, while the relief would not be available for other members of the group that exceed the limit,” Mr Tisher said.
“Larger Victorian employers who have a taxable wages limit in excess of $3 million will not qualify for the payroll tax relief. No pro rata concessions are available.”
Payroll Tax Relief in other states
Mr Tisher noted that other states and the ACT have introduced their own payroll tax relief measures in response to COVID-19, however each differs to the measures introduced in Victoria.
NSW for example, has introduced a 25% reduction in payroll tax applicable to total grouped Australian wages of not more than $10 million and an increase in the tax-free threshold to $1 million (as has WA). Queensland has introduced a refund of payroll tax for 2 months and a payroll tax deferral of three months. Other States and the ACT have introduced combinations of deferrals, waivers or one-off grants.
Payroll tax relief: state-by-state breakdown
- 25% reduction in annual payroll tax liability for businesses, with total grouped Australian wages no higher than $10 million for the current financial year when the annual reconciliation is lodged in July 2020
- No payment of payroll tax required in March, April and May 2020 for businesses that lodge and pay monthly with a total Australian payroll no higher than $10 million for the current financial year (the wage information for these months will still need to be provided in the annual reconciliation to receive the 25% reduction).
- tax-free threshold will increase from $900,000 to $1 million for the financial year from 1 July 2020
Find out more about NSW payroll tax relief.
- Employers with an Australian payroll of $6.5 million or less may be able to apply for a refund of payroll tax for 2 months, a payroll tax holiday for 3 months or a deferral of payroll tax for the 2020 calendar year
- Employers with an Australian payroll of more than $6.5 million that are negatively affected (directly or indirectly) by coronavirus, can apply for a deferral of payroll tax for the 2020 calendar year or a refund of payroll tax for 2 months.
Find out more about Queensland payroll tax relief.
- Employers with an Australian payroll of $7.5 million or less that are directly or indirectly affected by COVID-19 can apply to defer monthly or quarterly payments until 21 July 2020
- Employers with an Australian payroll of more than $1 million and up to $4 million maybe eligible for a one-off grant of $17,500. Grants will automatically be paid by cheque from July.
Find out more about Western Australian payroll tax relief.
- A one-off, 6 month payroll tax waiver from March to August 2020 for creative arts, entertainment and hospitality businesses (including cafes, pubs, hotels, clubs and restaurants)
- Businesses with Australian wages of up to $10 million can defer payment of their 2020-21 payroll tax (interest-free) until 1 July 2022 (payroll tax returns will need to be lodged as normal)
Find out more about ACT payroll tax relief.
- payroll tax exemption for hiring Territory employees has been extended to 30 June 2021
Find out more about the Northern Territory response to COVID-19.
- Hospitality, tourism, and seafood businesses will not be required to lodge payroll tax returns for March, April and May 2020 (Annual Adjustment Return for 2019-20 is still required)
- Employers with an Australian payroll of up to $5 million annually, who can prove they are affected by COVID-19 will not be required to lodge payroll tax returns for March, April and May 2020 (Annual Adjustment Return for 2019-20 is still required)
- Employers who pay payroll tax and employ new youth employees aged 24 years and under between 1 April 2020 and 31 December 2020 are eligible for a one year payroll tax rebate.
Find out more about Tasmanian payroll tax relief.
- No payroll tax measures announced to date.
Find out more about South Australia’s payroll tax.
Keep an eye on The Tax Institute’s website for online webinars relating to payroll tax measures including our upcoming session on the Commissioner of State Revenue v The Optical Superstore Pty Ltd decision and its implications for the payroll tax obligations of medical and health practices.