13 March 2018

Today’s policy announcement by SA Best that small businesses will receive payroll tax relief for employing up to five additional staff shows payroll tax disincentive to employ.

Business SA implores all political parties, including the Labor Party, to announce how they will reduce the payroll tax burden on small businesses prior to Saturday’s election.

The SA Best Party announced today that businesses with less than 20 employees will be subject to payroll tax relief for employing up to five additional employees. SA Best Leader Nick Xenophon said, “SA now has the worst payroll tax threshold of any other state in Australia.” Mr Xenophon went on to say our current payroll tax regime did nothing more than hurt local jobs, and acknowledged we needed to create jobs and not give small business a reason NOT to prosper and employ more people.

Business SA Executive Director Industry and Government Engagement Anthony Penney said South Australia had the lowest threshold at which payroll tax kicked in for small businesses nationally, and we need the next State Government to lift it to $1.5 million to ensure our state can be more competitive, with the ultimate goal being complete abolition.

“We want to make more businesses competitive, and that also means lowering our rate of 4.95 per cent to 4.5 per cent, to ensure South Australia has the most supportive payroll tax rate in the nation,” Mr Penney said.

Business SA recently released its pre-election payroll tax policy, which includes recommendations to make South Australian businesses more competitive and better able to create sustainable jobs, boosting the state’s employment rate and growing our economy.

Business SA’s four key payroll tax priorities are:

RECOMMENDATION 1: Lift the payroll tax threshold from $600,000 to $1.5 million and reduce the rate from 4.95 per cent to 4.5 per cent by 1 July 2020, to ensure South Australia has the most competitive payroll tax structure of any state.

RECOMMENDATION 2: In reducing the payroll tax rate to 4.5 per cent by 1 July 2020, ensure the rate is only available to companies which either move to, or retain their headquarters in, South Australia.

RECOMMENDATION 3: Introduce a payroll tax incentive for Science, Technology, Engineering & Maths (STEM) PhD graduates to increase collaboration between universities and business, with an exemption equivalent to 200 per cent of wages.

RECOMMENDATION 4: Re-introduce the payroll tax exemption for wages paid to apprentices and trainees.

Business SA acknowledges the Liberal Party will exempt businesses with payrolls less than $1.5 million from payroll tax, however the State Government’s announcement of permanent payroll tax relief for small businesses in the 2017-18 budget was superseded following the bank tax defeat with a statement that the previously announced relief would only be temporary.

“The State Government must advise before Saturday’s election how it will provide permanent payroll tax relief for small businesses,” Mr Penney said.