The NSW Treasurer, Dominic Perrottet, handed down the NSW Budget 2020-21 on 17 November 2020. Some of the key tax measures aimed at supporting businesses are outlined below.
Budget outcome and employment numbers
New South Wales recorded a budget deficit for 2019-20 of $6.9 billion. The 2020-21 Budget projects a budget deficit of $16 billion in 2020-21. This is expected to taper back to a deficit of $460 million in 2023-24 and the Government is anticipating a return to surplus by 2024-25.
In the first half of 2020-21, the unemployment rate rose to its highest level since the late 1990s to 7.2%. The Budget Papers expect to see the unemployment rate move higher “in the near term” (coinciding with the removal of the Commonwealth job support measures), but expect the unemployment rate to “ease back” to around 6.5% by June 2021.
Payroll tax changes
There are 2 changes affecting payroll tax.
First, the payroll tax rate will be reduced from 5.45% to 4.85% for 2020-21 and 2021-22.
Second, the payroll tax threshold will increase from $900,000 to $1.2 million from 1 July 2020. This is a permanent measure (unlike the changes in the rate). It had previously been announced that the threshold would increase to $1 million from 1 July 2020.
The Payroll Tax Amendment Bill 2020 has been introduced into the NSW Parliament to implement these measures.
Digital voucher for certain SMEs ($1,500)
The Government is to introduce a digital voucher scheme for those businesses who do not pay payroll tax (and so cannot get the benefits of the payroll tax changes).
The voucher will be:
- available for small to medium-sized businesses in NSW which do not pay payroll tax;
- capped at a cost of $1,500 per business, and be used towards the cost of any government fees and charges;
- accessible through the MyService NSW portal and operate as a rebate, where a claim can be made after fees and charges have been paid; and
- available for use from April 2021 to 30 June 2022.
Land tax relief for landlords/rental relief for tenants
The NSW Government currently provides land tax relief for landlords who are providing rent relief pursuant to the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles, ie those who reduce the rents of tenants experiencing financial distress as a result of COVID-19. (That link is quite useful, as it also provides details of the application of the Code by the various States and Territories.)
Landlords can receive land tax relief (in the (current) 2020 land tax year) of up to 50% of their land tax liability relating to the land leased. It applies to commercial tenants who have an annual turnover of $50 million or less.
The Budget extends the land tax concession, subject to some important changes.
First, the Government will provide land tax relief of up to 25% for the 2021 land tax year for landlords of retail tenants (ie rather than 50%).
Second, in 2020, commercial tenants must have an annual turnover of not more than $50 million, in order for the rental reductions to be eligible. In 2021, the relief will be limited to rental reductions provided to retail tenants with annual turnover of up to $5 million.
Specifically, the relevant press release states that to be eligible for relief from 1 January 2021 to 28 March 2021:
- the lease must be a retail lease;
- the annual turnover of the tenant must be less than $5 million;
- the tenant needs to re-establish eligibility by demonstrating a 30% decline in turnover (15% for non-profits) for the December 2020 quarter.
$100 digital vouchers
Each adult NSW resident will be eligible to claim up to $100 in digital vouchers to spend on eating out and entertainment (including restaurants, visitor sites and cultural attractions).
There appears to be quite a bit of information in the media about this proposal, but there was scant detail on the NSW Treasury website as at the time of publication.
Jobs Plus Program
The Jobs Plus Program is a $250 million program designed to support companies who want to “expand their footprint” in NSW. It will provide private and non-government sectors seeking to invest in job-creating projects, proposals and partnerships, with support throughout the critical stages of business development. It is aiming to create or support up to 25,000 jobs to 30 June 2022.
Key elements include:
- payroll tax relief – up to a 4-year period, for every new job created where a business has created at least 30 new net jobs;
- assistance with the NSW planning system – this will include “fast tracked planning approval pathways and advice”, plus guidance on appropriate site selection to increase speed to market;
- subsidised training programs – partnering to develop subsidised training programs in order to build specialised skills aimed at sustaining these new jobs into the future. This includes funding to develop and deliver “bespoke skills programs” which can be accessed by the wider NSW community;
- providing enabling infrastructure – this will include building local roads, access to utilities and future-proofed digital infrastructure;
- Jobs Plus Concierge Service – access to a one-stop-shop Jobs Plus Concierge Service in government to help businesses efficiently navigate and access government agencies and programs;
- Government spaces and accommodation – access to free or subsidised government spaces and accommodation.
Interested parties are encouraged to register.
This article was first published in Thomson Reuters’ Weekly Tax Bulletin.