The Victorian government will begin refunding payroll tax payments to small and medium businesses across the state this week as part of its $1.7 billion economic stimulus package in response to the COVID-19 pandemic.
Victorian Premier Daniel Andrews and Treasurer Tim Pallas outlined the measures on Saturday in what they said is a stimulus package targeted directly at SMEs and the workers they employ.
The government has pledged to fully refund the payroll tax already paid by small and medium businesses in the 2019-2020 financial year, in a measure estimated to be worth $550 million.
To be eligible for the refunds, businesses must have a payroll of less than $3 million. The payments will begin this coming week and the government said businesses could save up to $113,975 a year.
The government estimates the average saving to a business will be $23,000 and specified that the payments are a refund, not a loan.
In Victoria, the annual payroll tax threshold is $650,000, and the current rate is 4.85%, except for regional employers, which pay a reduced rate of 2.425%.
Small and medium businesses will also be able to defer any payroll tax payments for the first three months of the 2020-2021 financial year, up until January 2021, which the government said will contribute an additional $83 million back into the business community.
“We’ve listened to business and workers and now we’re taking unique and unprecedented action to help businesses and their workers through the crisis,” Andrews said.
“Cash is better in the hands of struggling businesses than in a government bank account right now; Victorian workers need us to step up to help get them through.”
Victoria joins New South Wales, Queensland, Tasmania and Western Australia in offering payroll tax relief to businesses affected by the escalating economic crisis.
Speaking to SmartCompany last week, Melbourne business owner Adam Pope said relief from payroll tax would “absolutely benefit” his company, although he added that, at a few thousand dollars a month, the total savings from not having to pay the tax would not be “huge”.
In a series of additional measures designed to alleviate the financial pressures now facing Victorian businesses, the state government also said:
Businesses in the hospitality, tourism, accommodation, arts, entertainment and retail sectors may also receive additional assistance through a new business support fund to be established by the Victorian government.
While details are yet to be released about what kinds of financial support will be made possible through this fund, the government said it will be administered in partnership with the Australian Industry Group, the Victorian Chamber of Commerce and Industry and the Australian Hotels Association. The government said the fund will support businesses that may not be eligible for payroll tax refunds because their payrolls exceed $3 million.
Businesses can register their interest in the fund by filling out this online form.
An additional $500 million will be used to establish a working for Victoria fund to find employment for workers who have lost their jobs because of the coronavirus pandemic. This fund will be established in consultation with the Victorian Council of Social Services and the Victorian Trades Hall Council.
The Ai Group strongly welcomed the stimulus measures in a statement on the weekend, with Tim Piper, the group’s Victorian head, describing the payroll tax refunds as “significant”.
“The announcement recognises the crisis conditions many small companies in Victoria are already experiencing,” he said.
“Discussions with the Treasurer have been positive, with the government recognising the intensely difficult position for employers and it has committed to providing ongoing support.”
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Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
