SA Budget 2020: Boost for business as payroll tax exemptions extended until June 2021

The State Budget will extend payroll tax exemptions for a huge number of businesses and double down on existing programs.

The state’s engine room will get a much-needed cash flow supercharge with the State Government delivering a $233 million payroll tax holiday as part of a grab-bag of funding promises designed to shepherd the economy through a difficult two years.

In addition to a massive infrastructure spend across large and small projects and targeted support for the heavily-impacted tourism and events sectors, the government has also doubled down on funding existing programs to help South Australian businesses.

The measures include:

PUMPING $82 million into a second round of $10,000 grants for small businesses and a new $3000 payment for owner-operated small businesses

A $220 million increase for the Economic and Business Growth Fund

AN extra $245 million for the Business and Jobs Support Fund (which includes some of the payroll tax and land tax measures) and the Community and Jobs Support Fund;

$100 million from this fund for a Local Government Infrastructure Partnership Program, which after matching funding will pay for at least $200 million of projects

ANOTHER $76 million from this fund for a Housing Construction Stimulus Package designed to support the sector after the HomeBuilder stimulus wanes

$60 million for capital upgrades to government buildings to improve energy efficiency.

There are fears of a cashflow crunch in coming months, as a range of federal and state economic stimulus measures, such as JobKeeper support programs, are scheduled to wind down.

In a bid to ensure businesses survive and in some cases look to grow over the near and medium term, Treasurer Rob Lucas has extended payroll tax exemptions for businesses with payrolls of less than $4 million to the end of the financial year.

This program, originally meant to finish in September, before being extended to the end of December, will now deliver a total of 15 months payroll tax-free for these businesses.

“All small and medium businesses with annual Australian grouped wages of up to $4 million will pay no payroll tax for the period from April 2020 to June 2021,’’ Mr Lucas said.

“Larger businesses with annual Australian grouped wages greater than $4 million and who are eligible for the extended JobKeeper payment from January 4, 2021 also will pay no payroll tax for the period January 2021 to June 2021.

“In addition to these payroll tax waivers, larger businesses with payrolls greater than $4 million and who were also adversely impacted by COVID-19 are able to defer their payroll tax due for the period April 2020 to December 2020.’’

Extended payment arrangements will be available for these deferred payroll tax liabilities, the Treasurer said, with the deferral is estimated to have a cashflow benefit to businesses of up to $180 million.

This deferral is important, because these businesses had faced a potential payroll tax bill shock on January 14, for while they were able to defer payments, under previous rules they had to pay up at that point.

All Commonwealth JobKeeper payments will continue to be exempt from payroll tax, costing the government $69.5 million,

“Finally the government has also decided to provide the equivalent of payroll tax relief for 12 months for wages paid to eligible new apprentices and trainees who commence a relevant contract of training with an employer from November 10, 2020 to June 30, 2021,’’ Mr Lucas said. “The cost of this relief is estimated to be $5.7 million.’’

The total payroll tax relief over the three years to 2021-22 is now estimated to be $233 million.

Payroll tax receipts had been scheduled to increase modestly, by $4 million per year, across the forward estimates, in last year’s Budget.

While $233 million will trimmed from payroll tax receipts over the forward estimates, they will recover to near pre-covid forecast levels by next financial year and hit $1.47 billion in 2022-23, still representing the government’s largest-single tax take by a wide margin.