Payroll Tax (Exemption for Small Business) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (17:12): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the detailed explanation of clauses inserted in Hansard without my reading them.

Leave granted.

This Bill, one of our many election commitments, proposes amendments to the Payroll Tax Act 2009 to scrap payroll tax for small businesses.

The people of South Australia spoke in the 2018 election of their desire for change. Change that will create more jobs and assist small businesses. Our policy platform was based on the mantra of More Jobs. Lower Costs and Better Services. This Bill certainly does that to reset the parameters

With these amendments, from 1 January 2019, businesses with annual taxable wages of up to $1.5 million will be exempt from payroll tax and those with wages between $1.5 million and $1.7 million will benefit from a reduced payroll tax rate. These changes are expected to benefit around 3,600 businesses reducing the payroll tax they pay by an estimated $44.5 million each year, with individual businesses saving up to $44,550 per annum. It is estimated that 3,200 of these businesses will be exempt from payroll tax, and 400 will receive a reduction in their payroll tax liability.

Payroll tax is currently levied on taxable wages at the rate of 4.95 per cent above an annual tax-free threshold of $600,000. The changes in this Bill will mean that businesses with annual taxable payrolls below $1.5 million will no longer be liable for payroll tax. Businesses with annual taxable wages above $1.5 million will continue to receive a deduction of up to $600,000 from their taxable wages, consistent with the existing tax-free threshold. To smooth the transition to standard rates of payroll tax, businesses with taxable wages between $1.5 million and $1.7 million will pay a tax rate that increases proportionately from zero per cent at $1.5 million to 4.95 per cent at $1.7 million in taxable wages. Businesses with annual taxable wages above $1.7 million will continue to pay a rate of 4.95 per cent.

The Bill will also amend the threshold for weekly wages at which businesses are required to register for payroll tax and the monthly payroll tax payment amounts, in line with the proposed changes.

These changes will remove a major disincentive to businesses, creating more jobs and employing more people, as well as making South Australia a much more attractive place to invest in and grow businesses. Once again this is an example of our Government delivering for the people of South Australia.

I commend the Bill to Members and I seek leave to insert the explanation of clauses into Hansard.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

Certain amendments are required to come into operation on 1 July 2018 in order to provide for the calculation of payroll tax liability for the 2018/19 financial year. Other amendments will come into operation on 1 July 2019.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of Payroll Tax Act 2009

4—Amendment of section 3—Interpretation

A definition of 2018/19 financial year is inserted.

5—Amendment of section 8—Amount of payroll tax

Section 8 is consequentially amended to specify that Schedules 1A and 2 set out the amount of payroll tax payable for the 2018/19 financial year.

6—Amendment of section 80—Designated group employers

This amendment is consequential.

7—Amendment of section 82—Determination of correct amount of payroll tax

Section 82 is consequentially amended to provide that the correct amount of payroll tax payable by an employer in respect of the 2018/19 financial year is the amount determined in accordance with Schedule 1A.

8—Amendment of section 86—Registration

This amendment is consequential.

9—Amendment of Schedule 1—Calculation of payroll tax liability

Schedule 1 of the Act is amended to provide for the changes to the calculation of payroll tax liability from 1 July 2019 (Schedule 1A provides for the calculation of payroll tax liability for the period from 1 July 2018 to 30 June 2019).

10—Insertion of Schedule 1A

New Schedule 1A is inserted:

Schedule 1A—Calculation of payroll tax liability—2018/19 financial year

Schedule 1A provides for the calculation of payroll tax liability for the 2018/19 financial year. The Schedule divides the year into 2 periods, the first period and the second period. This enables the changes to the calculation of payroll tax liability to take effect on 1 January 2019. Accordingly, Part 2 of Schedule 1A applies the current scheme for payroll tax liability for the first period (1 July 2018 to 31 December 2018) and Part 3 of Schedule 1A applies the changes to the calculation of payroll tax liability for the second period (1 January 2019 to 30 June 2019).

11—Amendment of Schedule 2—South Australia specific provisions

Schedule 2 of the Act is amended to provide for the changes to the calculation of payroll tax liability (both for the 2018/19 financial year and thereafter).

Debate adjourned on motion of Hon. I.K. Hunter.