24 June 2021
The New South Wales Treasurer Dominic Perrottet and South Australian Treasurer Rob Lucas handed down their respective 2021-22 budgets on 22 June 2021.
Both States are in the ‘red’, but they are in a better position than expected.
A number of predominantly minor State Tax changes were announced by both New South Wales and South Australia, which should broadly be welcomed.
These are the key State Tax announcements for businesses and personal taxpayers.
New South Wales
Payroll tax-free threshold increase to remain permanently
The payroll tax-free threshold will permanently increase to $1,200,000.
Whilst this is a minor threshold increase, which actually commenced with effect from the 2021-21 year, many businesses have benefited from this and will continue to benefit going forward.
Payroll tax rate reduction to continue
The temporary reduction in the payroll tax rate from 5.45 per cent to 4.85 per cent, which took effect in 2020-21, will continue in 2021-22.
Many employers will continue to benefit from this payroll tax rate reduction.
Motor Vehicle Duty
Motor vehicle duty for electric vehicles abolished
New and second-hand battery electric vehicles and hydrogen fuel cell vehicles with a value under $78,000 will be exempt from motor vehicle duty with effect from 1 September 2021.
This exemption will be extended to all zero and low emissions vehicles, new and used, from the start date of the new road user charge.
This change will help with reducing the upfront costs of electric vehicles and thus encourage more businesses and individuals to purchase these.
No announcements were made in relation to the proposed new property tax as part of the budget.
The New South Wales government is continuing to seek feedback on the proposed changes, which will be refined and implemented in due course.
Payroll tax trainee and apprentices exemption extended
Wages paid to apprentices and trainees who commence a relevant training contract up to 30 June 2022 will be exempt from payroll tax for the first 12 months of the relevant training contract.
The exemption applies from the relevant training contract commencement date and effectively provides a 12 month extension of the previously implemented exemption.
The measure is designed to support young persons entering the workforce and encourage the employment of other workers that are retraining.
Film industry payroll tax exemption and ex gratia relief abolished
The payroll tax exemption currently applicable to wages paid or payable in connection to a feature film produced in South Australia will be abolished from 1 July 2021.
Further, the provision of ex-gratia relief (granted on a case by case basis) for wages paid or payable for film production will also be abolished from 1 July 2021.
Whilst the above measures appear to decrease the incentives to film in South Australia, the budget benefits of these measures will be directed to the South Australian Film Corporation administered Screen Production Fund.
Land tax aggregation relief increased
Taxpayers negatively impacted by changes to the land tax aggregation rules which took effect from July 2020 will receive increased relief in 2021-22.
Specifically, the level of relief available under the transition fund will be increased from 30 per cent to 70 per cent of the relevant increase in 2021-22.
The increase in the relief available aims to assist taxpayers with recovering from the impacts of COVID-19.
Build to rent land tax discount introduced
Eligible new build to rent housing projects will be entitled to a 50 per cent land tax discount.
The discount will reduce the land value for land tax purposes by 50 per cent up to the 2039-40 land tax year.
The land tax reduction will only apply for eligible new projects where construction commences from 1 July 2021.
The land tax reduction aims to support the uptake of scale investment in residential rental housing, thus increasing the housing supply and creating more opportunities for renters.