Victoria State Budget 21/22: Payroll Tax Changes

Treasurer Tim Pallas delivered the Victorian State Budget for 2021/22 on 20 May with relief in regard to payroll tax for some businesses but with an additional tax based on payrolls for others.

  • From 1 July 2021, the payroll tax-free threshold is increased from the current level of $650,000 to $700,000. While this is expected to represent less tax payable by around 42,000 businesses, it is still well below the threshold of other states and territories which are in the $1m-$2m range.
  • For regional employers, from 1 July 2021, the payroll tax rate is reduced from 2.02% to 1.2125%.
  • The compliance burden has also been reduced for business that have an annual payroll tax obligation of $100,000 or less. They can move to annual reporting and payment rather than monthly, from 1 July 2021. This reduced compliance was previously available only to businesses with a payroll tax liability of $40,000 or less.

However, the Treasurer also announced an additional tax which is based on payrolls – the Mental Health and Wellbeing Levy. To come into effect on 1 January 2022, this levy will apply to the Victorian wages which are paid by businesses with an Australian wages bill in excess of $10m. The levy or surcharge will be 0.5% on wages in excess of $10m and 1% on those in excess of $100m.

If these changes impact your business and you would like to discuss your payroll tax situation, please contact me for an initial discussion. Specialising in payroll tax law, we are ideally placed to assist businesses to optimise their situation

Peter Tobin, Tobin Partners Lawyers peter@tobin.net.au 0438 001 809