2017-18 State Budget Provides For New Payroll Tax Rates

2017-18 State Budget Provides For New Payroll Tax Rates

South Australia Treasurer Tom Koutsantonis

New Payroll Tax Rate For Small Business

Victor P Taffa

2017-18 State Budget will include a new permanent payroll tax rate of 2.5 % in South Australia for small businesses with payrolls between $600,000 and $1 Million.

2017-18 State Budget will also extend payroll tax discounts to businesses with payrolls between $1 Million and $1.5 Million, benefitting an additional 1,300 businesses in this bracket. Under the current temporary payroll tax rebate, discounts phase out for businesses with payrolls between $1 Million and $1.2 Million.

“Small businesses are the biggest employers in South Australia and are crucial to creating jobs in our economy.” Treasurer Tom Koutsantonis said.

“By permanently cutting payroll taxes for small businesses we can give them the freedom and confidence to expand and take on more staff.”

New payroll tax rate structure will apply from 1 July 2017, with the measure forecast to cost about $45 Million over 4 years.

Annual Australian Payroll                    Applicable Tax Rate

Less than $600,000                                        0%

Between $600,000 and $1 Million              2.50%

Between $1 Million and $1.5 Million           Phasing up from 2.5% to 4.95%

Above $1.5 Million                                           4.95%

 

Background

New payroll tax rate for small businesses replaces the temporary small business payroll tax rebate, locking in discounts of up to $9,800 each year for small businesses with payrolls below $1 Million and removing the red tape of the rebate scheme.

Employers with annual payrolls between $1 Million and $1.5 Million will benefit by up to $8,800 from this measure each year, compared with the assistance received under the small business payroll tax rebate.

Employers eligible for the small business payroll tax rebate will still receive the rebate in 2017-18 (which is based on 2016-17 payrolls).

Since 2004, the State Government has progressively cut the payroll tax rate from 5.67 % to 4.95 %, and increased the tax-free threshold from $504,000 to $600,000.

A payroll tax rebate was announced in the 2013-14 State Budget to give employers a temporary payroll tax rate cut of up to 2.45 % for taxable payrolls up to $1 Million, with the concession phasing out for payrolls between $1 Million and $1.2 Million. The rebate was extended in following Budgets. This measure locks in and expands that payroll tax rebate.