NSW BUDGET '10-11: Roozendaal delivers double payroll tax cut

The NSW Government will cut payroll tax twice this year, contributing to savings of $4 billion for businesses

June 8, 2010

The NSW Government will cut payroll tax twice this year, contributing to savings of $4 billion for businesses.

NSW Treasurer Eric Roozendaal says it is a "massive boost for NSW businesses which delivers on the Keneally Government’s commitment to building for the future of NSW".

Under the payroll tax reforms:

  • The planned payroll tax cut from 5.65 percent to 5.5 percent will be brought forward to July 1, 2010 from its scheduled implementation date of January 1, 2011
  • A further cut will be implemented on January 1, 2011, taking the NSW payroll tax rate to 5.45 percent
  • The payroll tax threshold will also increase to $658,000 from July 1, 2010 – meaning any business with a payroll below this level does not pay payroll tax.

Roozendaal claims the cuts will save businesses $4 billion in the six years from the start of payroll tax cuts in 2008-09 until 2013-14.

Additionally, in 2010-11 $18.6 million is being invested in the Payroll Tax Incentive Scheme, supporting businesses with rebates up to $144,000 each to boost jobs and encourage business expansion into regional areas.

Roozendaal says the payroll tax cuts are permanent, fully-funded in the NSW Budget and simple for businesses to understand.

"This double tax cut is worth $110 million in savings to NSW businesses in 2010-11 alone, with the tax cut coming directly off the surplus and invested into the NSW economy," he says.

"This is a strong message to the NSW business community that the Keneally Government supports you and supports your plans to grow with the state into the future.

"The strong financial position of the NSW Budget has allowed the Keneally Government to not only bring forward the planned payroll tax cuts by six months, but to also cut payroll tax further."

Following the cuts NSW will have a middle ranking among the states and territories for the payroll tax rate.

Importantly, NSW is the only state to index the payroll tax threshold, which means that NSW businesses are not subject to bracket creep.

Since 1995, the NSW Labor Government will have cut the payroll tax rate from 7 percent to 5.45 percent.

"The number-one priority of the Keneally Government is supporting jobs and building for NSW’s future," Roozendaal says.

"This massive tax cut allows the state’s businesses to plan for the future with certainty, knowing these payroll cuts are permanent and fully funded by the NSW Budget."

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