Victorian Treasurer Tim Pallas has today unveiled the state’s post-pandemic budget, announcing a raft of measures to support small businesses including changes to payroll tax.
For small businesses in the state, the payroll tax-free threshold will increase to $700,000 and the regional payroll tax rate will be cut to 1.2%.
Treasurer Tim Pallas also announced further funding for wage subsidies, business events, distillery venues, and a plan to revitalise the CBD.
“We’re focused on helping those who need it the most — vulnerable Victorians, struggling small businesses, job seekers and families,” he said.
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Changes to payroll tax
The payroll tax‑free threshold will be increased to $700,000 from $650,000, reducing tax for about 42,000 businesses across the state.
The payroll tax rate for businesses in regional Victoria will also be reduced to 1.21%, down from 2.02%. The lower payroll rate will start from July 1 and is expected to benefit about 4,000 regional businesses.
Small businesses will continue receiving wage subsidies through the state government’s $619 million Jobs for Victoria program.
The program gives eligible businesses wage subsidies of up to $20,000, if they hire jobseekers.
Those subsidies can be used to meet the costs of taking on new employees for the first year of employment.
Treasurer Tim Pallas said this program has helped businesses employ at least 10,000 staff, with the help of $250 million in subsidies.
“This year’s budget builds on that work, supporting an average of 38,000 jobs each year over the next four years,” Pallas said.
Mental health levy
Big businesses paying more than $10 million in wages nationally will be required to pay a mental health levy.
The levy will be applied to payroll tax as a surcharge of 0.5% from January 1, 2022. The surcharge will apply from businesses’ $10 millionth dollar spent on wages for Victorian employees, with businesses that have payrolls above $100 million to be charged an additional 0.5%.
The levy is expected to be affect around 9,100 businesses operating in Victoria, and will raise $843 million each financial year, which the government will use to increase funding for mental health services.
New jobs tax credit
The Victorian budget will continue the New Jobs Tax Credit, which was established last year during the pandemic.
The tax credit supports small and medium businesses to rehire staff, restore hours and create new jobs.
Eligible businesses can receive a tax credit of ten cents for every dollar it increases taxable Victorian wages.
Skills and training
The budget is spending $384 million on skills and training to ensure the workforce has the skills businesses need.
This includes $86 million to establish a new Victorian Skills Authority, which will bring together industry, providers and other stakeholders to identify priority training areas, and create an annual Victorian Skills Plan.
The TAFE and training sector will receive an investment of $209 million to help create 12,200 extra subsidised training places.
The Victorian government is spending $43 million to improve the corporate events industry by creating a stronger pipeline of business events.
Distillery venue scheme
As part of a $160 tourism package in the Victorian budget, a new $10 million distillery door grant scheme will be established.
The scheme will provide funding to local distillers who attract tourists and create jobs through their ‘distillery’ door operations.
To encourage more visitors to Melbourne’s CBD, the government will spend $107 million.
This includes $7.4 million for a new voucher scheme to entice Melbournians and visitors to city cafes and restaurants.
It also includes the $100 million Melbourne City Recovery Fund, which is jointly funded with the City of Melbourne.
In a bid to boost the state’s creative and cultural industries, the government has set aside $288 million.
This includes a $121-million boost for the Victorian screen industry to help create jobs, develop local talent, and promote cultural events.