Payroll Tax System To Be Streamlined

Payroll Tax System To Be Streamlined

New South Wales Treasurer Dominic Perrottet

New South Wales Productivity Commission Delivers On Payroll Tax

Victor P Taffa

Businesses across New South Wales will benefit from a streamlined and modernised payroll tax system following a review by the New South Wales Productivity Commission.

New South Wales Government will be implementing all 12 recommendations handed down in the New South Wales Productivity Commission report.

As part of the reforms, from next year payroll tax administration will be streamlined with the introduction of equal automated payments making payroll tax a set-and-forget affair, rather than a monthly hassle.

Treasurer Dominic Perrottet thanked the New South Wales Productivity Commissioner and his team for their work with the New South Wales Business Chamber estimating payroll tax administration to be costing businesses around $10,000 a year.

“When we established our first ever state Productivity Commission I made their first priority reviewing payroll tax administration.” Treasurer Perrottet said.

“For many businesses, the time and resources taken up just by calculating and paying payroll tax is itself a tax on productivity.”

“We are reducing the costs and making compliance easier giving businesses more time and money that can be reinvested back into their business and the people working in them.” Treasurer Perrottet said.

New South Wales Productivity Commissioner Peter Achterstraat said this important reform would allow businesses across the State to grow and prosper.

“Improving the operating environment for New South Wales businesses is a major focus for me in driving productivity for New South Wales.” Mr. Achterstraat said.

“We have listened to businesses and I am delighted that my Review’s recommendations are being implemented and businesses in New South Wales will be benefiting from our reforms.”

“This is just the start of what I want to do to support businesses in New South Wales.” Mr. Achterstraat said.

New South Wales Business Chamber CEO Stephen Cartwright welcomed the changes.

“This initiative will be well received by the business community across New South Wales, already benefitting from an increase to the Payroll Tax threshold last June.” Mr. Cartwright said.

“Costs in administration were, for many, more onerous than the actual tax.”

Treasurer Perrottet said while the New South Wales Liberals & Nationals Government are committed to cutting taxes Opposition Leader Michael Daley and the New South Wales Labor Party only had plans to cut services and raise taxes.

“Labor has no plans to make life easier for businesses in New South Wales. They will punish businesses and families by raising taxes and cancelling projects because they are lazy and have no plans for reform.” Treasurer Perrottet said.

“Under Labor businesses will be tied up with red tape and looking over their shoulder wondering who is coming for their profits next.”

“Coalition is proud to have cut about $4.4 Billion in taxes in our last 3 budgets and we will continue to cut taxes wherever and whenever we can.”

“This is just one of many steps our Government is taking and will continue to take to drive productivity growth and increase prosperity in our State.” Treasurer Perrottet said.

 

Fast Facts

  • From July 2019 around 11,000 small businesses with a payroll tax liability under $20,000 will have the option of paying their payroll tax just once a year, with a single annual return.
  • Currently all businesses need to submit a monthly return and make a monthly payment.
  • Businesses with a liability under $150,000 will be able to submit just 1 annual return and make pre-set monthly instalment payments, based on the previous year’s liability.
  • Reforms to the payment frequency and the calculation method are expected to generate business savings of about $10 Million per year, saving an average of about 16 hours work each year for 27,000 businesses by 2020-21.
  • From mid-2019, businesses which become payroll tax compliant within 3 months of being notified will receive a 50 % reduction in their penalty, saving businesses around $400,000 in total each year.
  • Businesses will also be given an extra week to complete their annual reconciliation requirements, starting with this financial year.
  • This change follows the budget announcement in June that the payroll tax threshold would be lifted from the current level of $750,000 in 2017-18 to $1 Million by 2021- 22.
  • By 2021-22, approximately 5,000 firms that would have paid payroll tax will be exempt, avoiding both the tax itself and the administrative costs of complying with the payroll tax system. Firms with payroll greater than $1 Million will also save up to $13,625 in tax annually from 2021-22.
  • These cost savings could encourage new business investment and support the employment of up to 3,500 more workers by 2021-22.
  • Changes to the payroll tax thresholds will boost business’ bottom lines with $881 Million returned to their pockets over the next 4 years.