State Budget delivers Tax Cuts for South Australian Employers & Landowners

Sep 10, 2018

The South Australian budget proposes cuts to payroll tax and land tax providing relief to many small to medium businesses and land owners.

PAYROLL TAX

From 1 July 2019 employers who pay annual wages of less than $1.5m will be exempt from payroll tax providing them with savings of up to $44,550. For businesses with annual wages of between $1.5m to $1.7m, full rates will phase back in and if an employer pays wages of more than $1.7m, they pay the full rate of tax. There is no change to the $600,000 threshold for payroll tax so the rate of tax on wages between $1.5m and $1.7m is extraordinarily high as can be seen below:

Group Wages

Payroll Tax Payable

$1.5m

$0

$1.6m

$24,750

$1.7m

$54,450

The effective payroll tax rate if you increase your annual wage bill from $1.5m to $1.7m will be 27.2%, acting as a substantial deterrent to businesses employing new staff if their wages are around this level.

The existing payroll tax rates continue to apply up until 1/1/19.

LAND TAX

From 1/7/20 the tax free threshold for land tax is proposed to increase from $369,000 to $450,000. Unlike the payroll tax change above, this will benefit all land tax payers. A further cut is proposed to be made by decreasing the rate of tax on the value of land held between $1.2m and $5m from 3.7% to 2.9%.