When the Queensland Labour Government handed down the 2019-20 State Budget they announced that they were focused on jobs growth and improving employment rates. As part of their plan they have introduced three key payroll tax incentives targeted at small and medium businesses.

To partly assist with funding the new incentives there has also been an increase to the payroll tax rate for large businesses with annual taxable wages of $6.5M or more.

We have summarised the key aspects of each of the changes below:

Increased Payroll Tax-Free Threshold

The payroll tax-free threshold has increased from $1.1M to $1.3M from 1 July 2019. This increase benefits all Queensland employers with annual taxable wages of up to $6.5M. The Government has estimated that approximately 1,500 Queensland businesses will fall below the threshold as a result of the increase and pay no payroll tax.

If you were previously paying payroll tax and your estimate of taxable wages for the year ended 30 June 2020 is less than $1.3m we recommend that you contact the OSR to change your reporting cycle to either 6 monthly or annually in order to reduce your record keeping requirements.

Payroll Tax Discount for Regional Businesses

This discount reduces the payroll tax rate by 1% to 3.75% for medium size businesses (up to and including $6.5M annual taxable wages).

This discount applies to businesses with a registered business address in regional areas where at least 85% of taxable wages are paid to employees who reside in regional Queensland. Regional Queensland includes:

  • Cairns
  • Central Queensland
  • Darling Downs-Maranoa
  • Mackay-Isaac-Whitsunday
  • Queensland-Outback
  • Townsville
  • Wide Bay

The Queensland Government predicts that the 85% residential test will encourage regional businesses to employ locally.

If you satisfy the eligibility criteria you can claim the discount when lodging your periodic payroll tax return. To do this you will need to select the regional employer rate discount in OSRconnect when submitting a return.

Rebates for Employers That Grow Jobs

A new rebate has been introduced for employers who have a net growth in total full-time employees over a year. The rebate applies a 100% reduction to the payroll tax related to the net growth in employees up to a cap of $20,000 and will apply for 2 years from 1 July 2019. This new rebate will be claimed as part of the annual return.

The Queensland Government will soon release details on eligibility conditions and how the rebate is calculated.

Apprentice & Trainee Rebate

The existing apprentice and trainee rebate will be extended until 30 June 2021.

In addition to wages for apprentices and trainees being exempt from payroll tax, a 50% rebate is available. The rebate is automatically calculated when you enter your apprentice and trainee wages and lodge a return in OSRconnect.

You can calculate the rebate amount by multiplying 50% of the apprentice and trainee wages by the applicable payroll tax rate for each return period.

Increase in Payroll Tax Rate for Large Business (Payroll of $6.5M or more)

In contrast to the changes for small and medium businesses the payroll tax rate for large businesses with annual taxable wages above $6.5m is to be increased by 0.2 of percent from 4.75% to 4.95%.

These reforms can be seen as a genuine tax cut as they are predicted to reduce revenue for the Queensland State Government by approximately $341 million over a four year period.

Do you have any questions?

If you would like to discuss how the payroll tax changes will impact on you and your business or find out how you can take advantage of the regional discount and growth rebate, please contact Luke Launder on 07 3831 1055 or Luke.Launder@hallbrowns.com.

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DISCLAIMER: The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from Hall Browns Accountants. You should consider seeking the appropriate legal, financial, or taxation advice to check how the website information relates to your unique circumstances.


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