document.write(''); Tax relief for SMEs, pressure on large retailers - Simo Baha

Tax relief for SMEs, pressure on large retailers

The government is taking measures to make payroll taxes fairer for businesses.

The salary tax-free threshold is currently $700,000, which is considered insufficient. To better support small businesses in the state, the tax-exempt threshold will be increased to $900,000 on July 1, 2024. Furthermore, the next increase of $1 million will be from July 1, 2025.

These reforms are expected to benefit approximately 26,000 businesses in Victoria, potentially saving them up to $14,550 a year. Notably, about 6,000 of these businesses will no longer be required to pay payroll taxes. These benefits will be phased out for larger businesses to ensure that support is effectively targeted.

Say goodbye to insurance debt

The government aims to reduce the financial burden on businesses by abolishing business insurance levy, making Victoria the first state in Australia to do so. The insurance duty rate for various types of insurance, including fire and special industrial risks, public and product liability, professional indemnity, employer’s liability, marine and aviation insurance, will gradually decrease by one percentage point each year from July 1. , 2024

These reforms can save businesses about $3,200 in professional indemnity insurance and $2,400 in fire and other special risk insurance over a 10-year cumulative period.

In addition to these measures, the Government is actively working to make it easier to set up and run small businesses in Victoria through its regulatory reform agenda.

Overhaul stamp duty

Another significant change is the reform of stamp duty on commercial and industrial properties. The state budget proposes to switch from the current stamp duty system to an annual property tax, which will be applied ten years after the property is purchased. This change aims to simplify taxation and provide businesses with a more predictable financial landscape.

Furthermore, the benefit of the tax-free threshold will be phased out for large businesses. The purpose of this measure is to ensure that support is effectively targeted, benefiting smaller businesses that may require more assistance.

A mixed bag budget

The Australian Retail Association (ARA) has expressed its support for proposed measures to strengthen small businesses in Victoria. But the association also expressed concern about the potential economic consequences of the newly introduced COVID debt levy. The ARA warns that this levy could make Victoria’s business landscape more expensive, raising concerns about the overall economic climate.

In addition to the COVID Debt Levy, the State Budget imposes an additional payroll tax burden on larger businesses. Those with national wages above $10 million a year will be subject to an additional 0.5 percent payroll tax for the next ten years. Furthermore, businesses with annual payrolls of more than $100 million will be subject to an additional 0.5 percent increase, resulting in a total increase of 1.0 percent for these large entities.

While the intent of these changes is to ensure fair taxation, concerns have been raised about the potential impact on the economic environment. “Today’s budget contains some positives for small businesses, but the broader economic implications are troubling,” said ARA Executive Director Paul Zahra.

“While we understand the Government’s desire to pay off debts accumulated during the prolonged pandemic lockdowns, we are very concerned about the impact of the payroll tax increase on businesses.

“In fact, a payroll tax is a tax on jobs.”

“The cost of doing business is at a tipping point for many retailers, from the cost of goods and services to supply chain costs, higher wages, higher rents and costs associated with retail crime. These new and increased taxes are likely to result in job losses and increased customer prices, further contributing to the cost of living crisis.

“Last week the Government increased WorkCover premiums and today they are significantly increasing payroll tax. Victoria is one of the most expensive states in Australia to do business.”

Mr Zahra welcomed the government’s decision to raise the payroll tax-free threshold for small businesses to $1 million by 2025.

“This new $1 million threshold better serves small businesses. Wage growth has remained steady over recent years, so it’s great that the tax-free wage cap will reflect that,” Mr Zahra added. “This is particularly valuable for new small businesses so that they have a wider net of tax benefits while they are first starting out.

The ARA also welcomed the funding to support the implementation of an expanded government application visa program, streamlining access to skilled labour, and praised the government’s plan to abolish business insurance levies by 1 per cent every year from 2024.

The $30 million investment in the Business Acceleration Fund will help regulators facilitate innovation and growth for small businesses. Mr. Zahra said he looks forward to working with the state’s first economic growth commissioner, who will examine productivity opportunities and make recommendations on growth barriers that need to be addressed.

More here.

Follow our stories on LinkedIn Twitter:Facebook and Instagram.

Source link