The NSW Government has announced a major $2.3 billion health and economic stimulus package to protect the community and help protect jobs in the face of the COVID-19 outbreak over the next six months.
This package has two key components: $700 million in extra health funding and $1.6 billion in tax cuts to support jobs.
The health funding is intended to double ICU capacity, fund additional ventilators, establish acute respiratory clinics, purchase additional testing and other critical equipment. This funding injection will also bring forward elective surgeries to private hospitals, freeing up capacity at public hospitals.
A further $1.6 billion in tax cuts has been rolled out to business to support jobs.
The key tax elements include:
A $450 million tax cut by providing a waiver of NSW payroll tax for March, April & May 2020 for businesses with Australian grouped payrolls of under $10 million based on the current June 2020 year payroll level. The NSW Government believes this means these businesses will save 25% of their annual payroll tax bill for the 30 June 2020 year
A $56 million tax cut by increasing the payroll tax threshold from $900,000 to $1 million, effective from 1 July 2020 (previously this measure was planned to commence on 1 July 2021); and
An $80 million waiver of a range of fees and charges for small businesses including bars, cafes, restaurants and tradespersons.
These measures are designed to help business as they face the effects of the COVID-19 virus on the NSW economy. Further details and clarification is anticipated in the coming week.
What are the potential opportunities from the measures?
The announcement will have the immediate effect of saving cash otherwise payable to the State Government in the form of payroll tax.
“At its height, an employer with an average payroll amount of $833,330 per month will save approximately $41,330 in payroll tax per month, or $123,990 over the 3-month period to 30 June 2020,” explains Lawrence Dujmovic, a client director in tax consulting at Pitcher Partners Sydney.
“These cash savings can be redeployed by business owners into areas where their business may be suffering due to social isolation, ill staff and low consumer confidence.”
There are also a range of federal government concessions that were announced in the Economic Stimulus Package that was released last week. The cash saved from the temporary payroll tax waiver could be used to acquire business assets for which the Federal Government provides a 100% write-off.
Please contact your Pitcher Partners advisor if you need any assistance with these announcements.