Running a business can be a difficult endeavour. With a number of different processes to keep track of, even without help from specialist accounting services it can send many owners' heads into a spin. However, small businesses in Victoria will be getting a boost this year through a payroll tax cut.
Victorian Budget 2016/17 a boost for small businesses
The Victorian government has announced that businesses operating in the state will get a significant tax relief through new measures introduced in this year's budget. The aim is to help support businesses create more jobs, and support both apprentices and trainees.
Specifically, the government has increased the payroll tax threshold, which is the first time this has happened since 2002. The result will keep many many small businesses out of the payroll tax net, alleviating tax pressure and stimulating job growth.
Close to 36,000 businesses across the state should see benefits from the $286 million payroll tax cut, as the tax-free payroll threshold is raised from $550,000 to $650,000. The government forecasts that once it is fully rolled out, approximately 2,800 businesses will no longer have to worry about payroll tax.
Treasurer Tim Pallas said that once it is implemented, Victorian businesses with an annual payroll of $4.8 million and $31.5 million will have the lowest payroll tax in Australia.
As the small business sector is the backbone of the Victorian economy, the payroll tax cut will be a welcome sight and should ensure that SMEs are in a better financial state to compete.
As small businesses have their tax burden reduced, many will see an opportunity for growth. To capitalise, it is important to have an effective and robust business development plan in place.
1 July 2016 – First increase to $575,000
2016-2019 – Incremental tax-free threshold increases
1 July 2019 – Final increase to $650,000