Businesses with up to $7.5m wage costs eligible for generous new tax cuts
Territory business will save up to almost $70,000 each year as the government plans to introduce the country’s most generous tax concessions for small and medium businesses.
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The CLP government will introduce the country’s most generous payroll tax scheme from next year, with businesses spending up to $7.5m on wages set to save thousands.
On average, businesses will save $22,000 annually, and payroll tax will be eliminated for about 200 existing businesses, as the tax free threshold is increased from $1.5m to $2.5m.
Chief Minister Lia Finocchiaro said $12m revenue would be lost each year due to the reforms – a figure $2m smaller than Treasury’s pre-election costings of the policy, which estimated a $56m budget hole over four years.
Plumbing Maintenance Services owner Pat Whitehead said the tax cuts would help his business hire more workers.
“For us it’s a fantastic initiative, we won’t question now – if we need to employ more, we’ll employ more,” Mr Whitehead said.
“We found the payroll tax a hindrance to our growth. We’re basically being penalised for employing people.
“We have 26 plumbers employed on our books, including apprentices, and this absolutely gives us incentive to grow and employ more people.”
From January 1, 2025 payroll tax for businesses with wage bills below $2.5m will be waived.
From July 1 businesses with wages below $7.5m will not pay tax on $2.5m of their costs, saving up to $68,750 each year.
Treasurer Bill Yan said apprentice and trainee wages would also be exempt from payroll tax from July next year, as part of the $2.5m threshold.
There are currently about 3700 apprentices and trainees in the Territory.
“Our changes mean Northern Territory employers with total payrolls below $2.5 million will not pay payroll tax at all,” Mr Yan said.
“To get the Territory’s economy moving forward and rebuilding our reputation, we need to be the most competitive place to do business in the country.”
The Labor Opposition commended the CLP for trying to reduce pressures on Territory businesses, but called for answers on where the money would come from.
“We do not want to stand in the way of something that’s going to benefit Territory businesses who are struggling at times, especially with the cost of living,” Opposition Leader Selena Uibo said.
“But what we want to ask the question to the CLP is, how are they going to pay for this?
“Where is this money coming off, $56m is not going to just fall from the sky.”
Mrs Finocchiaro said that by reducing payroll tax, “we’re going to allow Territory businesses to grow, which will see more money spinning through our economy”.
“The dividends will pay off when we see more local businesses being able to grow and employ more Territorians.”
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Originally published as Businesses with up to $7.5m wage costs eligible for generous new tax cuts
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