09 Jan 2020-21 Victorian Budget: what’s in it for me?
The Victorian Treasurer has handed down the 2020-21 State Budget in challenging economic conditions. The government projects net debt will reach $87bn this year and will grow to $155bn by June 2024. Although the debt figures sound grim, according to the government, the interest costs over the next 4 years will not be burdensome, averaging 4.4% of revenue per year. However, in order to facilitate a quicker recovery, the Budget has targeted mostly businesses with the centrepiece being the “Jobs Plan”.
The Jobs Plan itself is a complementary set of initiatives aimed at supporting businesses and securing jobs for Victorians. $619m has been announced for enhanced and expanded Jobs Victoria services and wage subsidies. This includes $266.5m to enable Jobs Victoria to deliver face-to-face intensive support (including hiring new mentors and counsellors) for those that need extra help.
In addition, $250m will be invested to create around 10,000 jobs, using wage subsidies. These jobs will be identified in partnership with business and the community sector, and made available to those hardest hit by the pandemic including young people, retrenched workers and people who are long-term unemployed. At least $150m of subsidy support will go towards getting women back to work, in particular women aged over 45.
For small to medium businesses, the new Jobs Tax credit will help businesses rehire staff, restore hours of create new jobs. Under the plan, eligible businesses will get a tax credit of 10 cents for every dollar it increases taxable Victorian wages for up to 2 years. This means that businesses that re-hire staff and employ new workers will pay less payroll tax. It is projected that this measure will help an estimated 9,400 people back into employment.
To better support more businesses, the government is increasing the threshold for annual payroll tax payment from $40,000 to $100,000 on 1 July 2021. It is estimated that up to 7,000 extra businesses will be able to pay their payroll tax annually, rather than monthly, cutting administrative costs and boosting cash flow. Remember, the current arrangement for small to medium businesses to defer their 2020-21 payroll tax until the next financial year continues to remain in place.
Individuals haven’t completely missed out in the Budget, the Victorian government is supporting home buyers with more than $293m in tax relief. This includes a 50% land transfer duty waiver for new residential properties (25% for existing residential properties) for purchases up to $1m. However, contracts will have to be entered into between 25 November 2020 and 30 June 2021. It’s worth noting that this relief is over and above existing concessions.
According to the government, a first home buyers purchasing an existing home worth $700,000 would be eligible for both the first home buyer duty concession and the new 25% waiver, with the total tax relief exceeding $18,500.