Victoria’s Chamber of Commerce and Industry (CCI) has welcomed the news that the state government will slash its regional payroll tax rate in half.
From 1 July, the payroll tax rate for eligible regional businesses will be reduced to 2.425% in order to encourage regional investment and decentralisation out of Melbourne. Victorian CCI executive director policy and advocacy Dugald Murray said the state’s payroll tax, which is the lowest in the country, would be an incentive to locate and grow new businesses in the region.
According to the Latrobe Valley Express, employers with an annual payroll of less than AUS$650,000 (US$488,924) will not be obliged to pay the tax at all, which it is estimated will save about 4,000 Victorian companies AUS$167 million (US$126 million).
"This means more businesses can hire local people and put more back into their community," Murray said. "It actually benefits all businesses, but if you're a business that has payroll under AUS$650,000, you're not paying payroll tax so that's where the threshold rate for small businesses is really important."
The cut is expected to boost confidence across the business sector after the tax-free threshold was raised from AUS$550,000 (US$414 million) last financial year.
"This is a tax that discourages business from hiring more people because if they hire more people and it puts them above the threshold, then they've got to pay payroll tax," Mr Murray said. "Once you're over that threshold, the payroll tax rate is critical because if you've met the tax rate - you want to be paying as little as possible - and that's why the halving is essential."
He also called on the government to increase the threshold still further to AUS$850,000 (US$639,000).
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
Victoria’s Chamber of Commerce and Industry (CCI) has welcomed the news that the state government will slash its regional payroll tax rate in half.
From 1 July, the payroll tax rate for eligible regional businesses will be reduced to 2.425% in order to encourage regional investment and decentralisation out of Melbourne. Victorian CCI executive director policy and advocacy Dugald Murray said the state’s payroll tax, which is the lowest in the country, would be an incentive to locate and grow new businesses in the region.
According to the Latrobe Valley Express, employers with an annual payroll of less than AUS$650,000 (US$488,924) will not be obliged to pay the tax at all, which it is estimated will save about 4,000 Victorian companies AUS$167 million (US$126 million).
"This means more businesses can hire local people and put more back into their community," Murray said. "It actually benefits all businesses, but if you're a business that has payroll under AUS$650,000, you're not paying payroll tax so that's where the threshold rate for small businesses is really important."
The cut is expected to boost confidence across the business sector after the tax-free threshold was raised from AUS$550,000 (US$414 million) last financial year.
"This is a tax that discourages business from hiring more people because if they hire more people and it puts them above the threshold, then they've got to pay payroll tax," Mr Murray said. "Once you're over that threshold, the payroll tax rate is critical because if you've met the tax rate - you want to be paying as little as possible - and that's why the halving is essential."
He also called on the government to increase the threshold still further to AUS$850,000 (US$639,000).
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
