Victorian business the big winner in payroll tax reform

Melbourne, 27 April – The Victorian Government has provided a significant boost for businesses in the 2016/17 State Budget.

The threshold for the payment of payroll tax has been raised from $550,000 to $650,000, which represents a great win for all Victorian businesses and the state’s economy. 

The Victorian Automobile Chamber of Commerce (VACC), which has lobbied the Andrews Government on behalf of Victorian business for payroll tax relief, welcomed the announcement. 

VACC estimates that around 5,000 Victorian automotive businesses will gain tax relief as a result of these measures, or approximately one-third of all automotive businesses in the state. More broadly, Government estimates suggest that around 36,600 individual Victorian businesses that pay payroll tax will benefit from this change, with 2,800 businesses no longer paying payroll tax.

“This announcement is a significant boost to Victorian business. Payroll tax discourages businesses from hiring further staff so reducing this tax burden is essential if small business is to grow,” VACC Executive Director, Geoff Gwilym, said. 

The payroll tax-free threshold will be increased over four years commencing 1 July 2016. The increase will be phased in as follows:

  • 2016/17 – increase to $575,000
  • 2017/18 – increase to $600,000
  • 2018/19 – increase to $625,000
  • 2019/20 – increase to $650,000

 As of 1 July 2016 a payroll tax exemption will also be introduced for the wages paid, or are payable, by an employer to a displaced apprentice or trainee. This will support employers hiring apprentices or trainees wishing to continue with their qualifications.

“One of the key support services we offer our members is helping them to take on staff. We know how hard it can be, and we’re glad the Victorian Government is making it easier.

“On behalf of Victorian business owners, VACC congratulates the Andrews Government for this far-sighted initiative. VACC will continue to lobby Government on further tax and administrative relief on behalf of Victorian business,” Mr Gwilym said.

VACC is Victoria's peak automotive body.

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VACC Executive Director, Geoff Gwilym
VACC Executive Director, Geoff Gwilym, says the changes will make it easier for businesses to take on staff