Along similar lines to some other states, the Victorian Government also announced Payroll Tax changes in their 2018/19 Budget to support regional areas.
Victorian Treasurer, Tim Pallas MP, announced that from 1 July 2018, the rate of payroll tax will be reduced from 3.65% to 2.425% for regional businesses. But before companies with ‘regional interests’ jump in to welcoming this relief, note that it applies only to those regionally-based business which have a payroll with at least 85% of wages associated with regional employees.
“Payroll tax is a complex tax and these changes clearly highlight the complexities, especially for companies with widespread operations,” Peter Tobin of Tobin Partners said.
Peter explained that businesses must first be 100% clear on what the Government defines as ‘regional’ and from there, determine which of their employees work in those regions. Then they must be able to justify that 85% of their total wages bill is derived from these regional employees.
“The rate reduction will be welcome relief for regional businesses, many of which are struggling with a range of issues and any cost-savings are appreciated,” Peter Tobin said. “But those who self-assess their payroll tax, will need to take care when applying this new measure, to avoid incorrect assessments.”
“Companies with say a Melbourne head office and several regional offices, will need to pay particular attention to exactly where their employees are officially employed.”
Businesses that calculate and submit incorrect payroll tax face very large financial fines and it is advisable that companies seek professional assistance to ensure they fully comply with the law. If you are considering self-assessment of your payroll tax, we urge you to read our blogs for information, tips and guidance.
Additional Regional Support
In further support to regional Victoria, the budget also included relief for young farmers with land transfer duty exemptions. The threshold for the young farmer stamp duty exemption will increase from $300,000 to $600,000 from 1 July 2018, aligning with first home buyers concessions.
Regional Victorian businesses may also be interested in several initiatives being offered by the Tasmanian Government for interstate businesses who relocate to regional Tasmania. The measures include a 3 year payroll tax exemption for the wages of regional-based employees of such companies.
“We handle payroll tax matters for businesses across Australia and we will be bringing this measure to the attention of our relevant clients,” Peter Tobin said.
Review Your Situation
Following both State and Federal Budget announcements is always a good time to review your overall company situation in regard to all taxation and other regulatory matters.
To discuss how the Victorian State Government changes to Payroll Tax and other tax measures effect your business, speak with us at Tobin Partners, Lawyers by email or call Peter Tobin 0438 001 809 for a confidential discussion on how to calculate payroll tax for your business.
