Payroll tax cuts in regional Victoria
New data has shown how businesses across regional Victoria have taken advantage of the Victorian Government’s regional payroll tax cuts. The numbers show businesses have saved more than $31 million in the first financial year it was introduced.
Since 1 July 2017, a lower Victoria payroll tax rate of 3.65% has applied to wages paid by regional employers. This rate further reduced to 2.425% from 1 July 2018.
Who is eligible?
Recapping the eligibility criteria, regional employers who are based in regional Victoria (First requirement) and pay at least 85% of Victorian taxable wages to regional employees (Second requirement) are eligible for the regional payroll tax rate.
First requirement: Based in regional Victoria
An employer is based in regional Victoria if it either has an ABN and a registered business address in regional Victoria or has its principal place of business in regional Victoria.
In general, the location requirement is determined with reference to the business’ location in the month the wages were paid. Where a business moves addresses during a month, location is determined by looking at where the business was located on the last day of the month.
Regional Victoria is defined as specified local government areas. You will need to be in one of the qualifying regional councils listed below to meet this requirement.
Second requirement: 85% of wages paid to regional employees
This requirement means the employer must pay at least 85% of its monthly Victorian taxable wages to regional employees under both its monthly and annual payroll tax return.
A regional employee is an employee who performs services for their regional employer ‘mainly’ in regional Victoria during the relevant month. Statutory guidance on what ‘mainly’ might mean is lacking, however the State Revenue Office indicates this would be satisfied where more than 50% of an employee’s services are performed in regional Victoria during a month.
Restructuring your business
Any business that has a Victorian regional presence but is below the 85% threshold could consider a restructure to ensure the regional part of their business is eligible to access the discounted regional payroll tax rate. However like any restructure, careful consideration should be had to anti-avoidance provisions and other issues that could reduce or remove any overall benefit of such a strategy.
To discuss this further, please contact:
Paul Gray
Principal Lawyer
T 03 5225 5231
E pgray@ha.legal
or
Rod Payne
Principal
T: 03 5226 8541
E: rpayne@ha.legal
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Councils A-G |
Councils G-M |
Councils M-Y |
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Alpine Shire Council |
Greater Geelong City Council |
Murrindindi Shire Council |
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Ararat Rural City Council |
Greater Shepparton City Council |
Northern Grampians Shire Council |
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Ballarat City Council |
Hepburn Shire Council |
Pyrenees Shire Council |
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Bass Coast Shire Council |
Hindmarsh Shire Council |
Borough of Queenscliffe |
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Baw Baw Shire Council |
Horsham Rural City Council |
South Gippsland Shire Council |
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Benalla Rural City Council |
Indigo Shire Council |
Southern Grampians Shire Council |
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Buloke Shire Council |
Latrobe City Council |
Strathbogie Shire Council |
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Campaspe Shire Council |
Loddon Shire Council |
Surf Coast Shire Council |
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Central Goldfields Shire Council |
Macedon Ranges Shire Council |
Swan Hill Rural City Council |
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Colac Otway Shire Council |
Mansfield Shire Council |
Towong Shire Council |
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Corangamite Shire Council |
Mildura Rural City Council |
Wangaratta Rural City Council |
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East Gippsland Shire Council |
Mitchell Shire Council |
Warrnambool City Council |
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Gannawarra Shire Council |
Moira Shire Council |
Wellington Shire Council |
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Glenelg Shire Council |
Moorabool Shire Council |
West Wimmera Shire Council |
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Golden Plains Shire Council |
Mount Alexander Shire Council |
Wodonga City Council |
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Greater Bendigo City Council |
Moyne Shire Council |
Yarriambiack Shire Council |
