state taxes bulletin 17 Jul 2020 Key Australian State tax developments and other measures in response to COVID-19 - Update

25% payroll tax reduction: businesses with total grouped Australian wages of $10 million or less for the 2019/20 financial year will have their annual tax liability reduced by 25% when they lodge their annual reconciliation (due on 30 October 2020⁴). For eligible businesses who lodge and pay monthly, no payment for the months of March, April or May 2020 will be required. Businesses eligible for payroll tax relief will still need to provide wage details paid in these months.

Tax deferral: businesses may defer their payroll tax payments until October 2020. This does not affect the requirement for businesses to lodge their 2019/20 annual reconciliation by 28 July 2020.

Increased payroll tax threshold: the payroll tax threshold for the financial year commencing 1 July 2020 will increase from $900,000 to $1 million. Eligible businesses will not be subject to payroll tax in 2020/21.

JobKeeper payments: The additional wages paid to employees to meet the requirements of the JobKeeper scheme will be exempt from payroll tax.⁵

Land tax reduction: commercial and residential landlords may receive a reduction of up to 25% of the land tax payable in the 2020 land tax year if:

• the land is used for business or residential purposes;
• the landlord is leasing that property to a residential tenant or a business tenant with annual turnover of up to $50 million who can demonstrate financial distress resulting from COVID-19;
• the landlord reduces rent of the affected tenant by at least as much as the tax reduction between 1 April and 30 September 2020; and
• the land tax is directly related to the property for which rent has been reduced.

Financial distress is considered to be a 30% drop in revenue for commercial tenants or a 25% drop in household income for residential tenants, and the drop is due to COVID-19.

Where land tax for the 2020 tax year has already been paid, eligible landowners will be able to apply for a refund.

Tax deferral: Revenue NSW has also noted that the general measures in extending deadlines for payments and getting leniency for late payments may also be available to affected taxpayers.

Deferral of other taxes:  Revenue NSW has also deferred the collection of the gaming machine tax and parking space levy.

$10,000 Small Business Support Fund Grant: small businesses in NSW which have been impacted by the COVID-19 shutdown may be eligible to receive grants of up to $10,000 under the Small Business Support Fund.

Small Business Recovery Grant:⁶ small businesses or not-for-profit organisations who meet various requirements including having an annual turnover of more than $75,000, that have experienced a decline in turnover and are highly impacted from the COVID-19 government closure orders may be eligible for a small business recovery grant of between $500 and $3,000. 

The grant helps small businesses meet the costs of safely reopening or up-scaling operations.

The grant is subject to having incurred eligible expenses for safely reopening or scaling up business from 1 July 2020 and only where no other government support is available. Applications close on 16 August 2020.

HomeBuilder grant:⁸ The HomeBuilder grant will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to either:

• build a new home as a principal place of residence, where the property value does not exceed $750,000; or
• substantially renovate an existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million (pre-renovation).

Owner-occupiers must meet one of the following two income caps:

• $125,000 per annum for an individual applicant based on 2018-19 taxable income or later; or
• $200,000 per annum for a couple based on both 2018-19 taxable income or later.

The building contract must be signed between 4 June 2020 and 31 December 2020, and construction must commence on or after 4 June 2020 and within three months of the contract date.

The Scheme is a Commonwealth Government programme administered by each State and Territory.

Other measures include:

• Waiver of various State fees and charges;
• $250m to employ additional cleaners of public infrastructure;
• Over $250m to bring forward maintenance of public assets;
• $500m to bring forward capital works and maintenance.

Payroll tax waiver: the payroll tax for the 2019/20 financial year is waived for businesses with annual Victorian taxable wages up to $3 million. Eligible businesses must continue to lodge returns but do not need to make further payments for the financial year.

Reimbursements for payroll tax already paid in the 2019/20 financial year can be claimed from the State Revenue Office  as a refund.

The eligibility threshold applies to each employer, so any member of a group that pays taxable wages of less than $3 million per annum is eligible for the relief.

Payroll tax deferral:⁹ businesses with payrolls up to $10m will be able to defer their payroll tax liability for the first half of the 2020/21 financial year.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Land tax deferral: land owners due to pay 2020 land tax that have at least one non-residential property (including commercial property, industrial property and vacant land – excluding residential vacant land) and total taxable landholdings below $1 million have the option of deferring their 2020 land tax payment until after 31 December 2020.

Deferred land tax payments will need to be paid in full by 31 March 2021.

Those who have already paid their 2020 land tax may request a return and pay the tax in full by 31 March 2021.

Landlords who meet the criteria for land tax reduction (see below) may also defer paying the balance of their 2020 land tax assessment until 31 March 2021.

Land tax reduction for landlords: commercial and residential landlords may be eligible to access a 25% reduction in land tax. 

Commercial landlords are eligible for a particular property if the property is rented to a tenant with an annual turnover of up to $50 million, the tenant is eligible for the Federal Government's JobKeeper payment, and the landlord has provided rent relief to the affected tenants. 

Residential landlords are eligible for a particular property if at least one of tenant's ability to pay their normal rent is affected by COVID-19, and the landlord has provided rent relief to the affected tenants. Relief is also available to certain eligible landlords who are unable to secure a tenant because of COVID-19. 

Business Support Fund:¹¹ small businesses in Victoria which have been impacted by the COVID-19 shutdown may be eligible to receive grants of $10,000 under the Business Support Fund. Certain businesses affected by the further COVID-19 shutdown may also be eligible to receive an additional $5,000 on application.

Liquor licence fee waiver:¹² businesses that have paid for a renewable liquor licence for 2020 will be reimbursed their licence fee and those yet to pay will have the fee waived.

HomeBuilder grant:¹³ The HomeBuilder grant is available in Victoria and the criteria is consistent with the programme in New South Wales (see above).

Regional Tourism Accommodation Support Program:¹⁴ certain accommodation providers across regional Victoria will be able to make a claim for payments based on the bookings refunded as a result of COVID-19 travel restrictions.

Payroll tax refunds, waivers, and deferrals: employers (or part of a group of employers) who pay $6.5 million or less in Australian taxable wages may receive a refund of payroll tax for two months (Nov and Dec 2019), a payroll tax waiver for three months (Jan to Mar 2020) and may apply for a deferral of payroll tax for the 2020 calendar year.

Employers (or part of a group of employers) who pay more than $6.5 million in Australian taxable wages and have been negatively affected (directly or indirectly) by COVID-19 may apply for a deferral of payroll tax for the 2020 calendar year and a refund of payroll tax for two months (Jan and Feb 2020).

A business is directly or indirectly affected by coronavirus if their current turnover, profit, customers, bookings, retail sales, supply contracts or other factors are negatively affected compared with normal operating conditions.

Deferred payments will be due 14 January 2021.

Businesses eligible for payroll tax relief in Queensland will still need to lodge their payroll tax returns as normal (without paying them) and can complete the payroll tax deferral application form online.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Land tax rebate: landlords may receive a reduction in land tax by 25% for eligible properties for the 2019/20 assessment year, if the ability of one or more tenants to pay normal rent is affected by COVID-19 and the landlord provides rent relief to the affected tenant of at least the amount of the land tax rebate.

Landlords must also comply with the leasing principles established by the Queensland Government for this relief package.¹⁸

The rebate is also available to landlords whose property is available for lease but whose ability to secure a tenant has been affected by COVID-19 and relief is required for the landlord to meet their financial obligations.

The rebate application deadline has been extended until 31 October 2020.¹⁹

Waiver of the foreign surcharge: the 2% foreign land tax surcharge is waived for foreign entities for the 2019/20 assessment year. Foreign entities who have already paid will be refunded.

Land tax deferral: a three month deferral of land tax liabilities for the 2020/21 assessment year will be permitted without application required.

COVID-19 Jobs Support Loans:²⁰ the loan facility provides low interest loans of up to $250,000 for carry on finance with an initial 12-month interest-free period to assist businesses impacted by COVID-19 to retain employees and maintain operations. Applications for the loans have closed.

Market Diversification and Resilience Grants (MDRG) program:²¹ the MDRG program provides benefits to Queensland agriculture, food and fishing exporters and their critical supply chain partners, as well as industry organisations working with exporters to build resilience by diversifying into new markets (international or interstate). Applications for the grants have closed. 

COVID-19 electricity rebate: sole traders, small and medium businesses who consume less than 100,000 kilowatt hours (kWh) will be eligible for a $500 rebate off electricity bills. The relief will be automatically applied on eligible electricity bills.

Business rent relief: businesses who rent state government premises may be eligible for rent relief.

Liquor licence fee waiver: liquor licensing fees waived for business impacted by enforced safety industry shutdowns.

HomeBuilder grant:²² The HomeBuilder grant is available in Queensland and the criteria is consistent with the programme in New South Wales (see above).

Payroll tax waiver: the payroll tax for employers (or each member of a group if grouped) whose Australian taxable wages from 1 July 2019 to 29 February 2020 was less than $5 million, or whose Australian taxable wages for the 2019/20 assessment year is less than $7.5 million is waived from 1 March 2020 to 30 June 2020. This will be automatically applied for employers whose Australian taxable wages were less than $5 million at 29 February 2020, and other employers can apply for a waiver if they expect their wages to be less than $7.5 million as at 30 June 2020. Eligible businesses will still need to lodge returns with the WA wages subject to the waiver recorded as exempt.

Increased payroll tax threshold: the payroll tax threshold will be increased to $1 million on 1 July 2020. This brings the increase forward six months from the planned date of 1 January 2021.

Employers who cancel their registration as a result of the increase will need to wait until the annual reconciliation function is available in August 2020 for adjustments to be made to their tax liability.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Commercial landlord land tax grants: grants equivalent to 25% of the landlord's 2019/20 land tax bill will be paid to commercial landlords who provide rent relief for a minimum of three months (starting from a date between 1 March 2020 and 31 May 2020) and freeze outgoings for small businesses that have suffered at least a 30% reduction in turnover due to COVID-19. Applications open on 1 May 2020.

Business grant:²⁵ employers, or groups of employers, whose annual Australian taxable wages were between $1 million and $4 million will receive a one-off grant of $17,500. Grants will automatically be paid by cheque from July but there will be delays for taxpayers whose tax status changed in 2018/19 or who became liable for payroll tax during the 2018/19 or 2019/20 assessment year.

Late payment penalty tax remittance:²⁶ taxpayers can apply for late payment penalty tax to be remitted in full if they can demonstrate that COVID-19 has directly or indirectly affected their financial circumstances.

Payment extensions:²⁷ taxpayers can apply to extend the time for paying tax or to pay by instalments. From 23 March 2020, new payment arrangements will be interest-free for taxpayers who demonstrate they are unable to pay their tax. 

Licence fee waivers:²⁸ a range of licence fees have been waived including liquor licence renewal fees, certain statutory planning fees and fees for tourism business operating in national and marine parks.

HomeBuilder grant:²⁹ The HomeBuilder grant is available in Western Australia and the criteria is consistent with the programme in New South Wales (see above).

Payroll tax waiver: businesses groups with annual Australian grouped wages up to $4 million will receive a six month payroll tax waiver for the sixth months from April to September 2020.  This will be automatically applied for businesses which had grouped wages below $4 million for 2018/19 but monthly payroll tax returns must still be lodged.

Payroll tax deferral: businesses with annual Australian grouped wages over $4 million that can demonstrate they have been significantly impacted by COVID-19 may be able to defer payroll tax payments for the six months from April to September 2020, which will now be due in October 2020.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Land tax relief for landlords: landlords may receive a reduction in land tax by 25% for eligible properties for the 2019/20 land tax year, if the tenant has been financially impacted as a result of COVID-19 and the landlord reduces rent to the affected tenant by at least the amount of the land tax reduction. Commercial tenants must have an annual turnover of up to $50 million in order to be eligible, and will be considered as being financially impacted if its revenue has dropped by 30% due to COVID-19 and it is eligible for the Federal Government's JobKeeper payment.

Land tax deferral: businesses and individuals paying land tax quarterly in 2019/20 will be able to defer payment of their third and fourth quarter instalments for up to six months. No application will be required.

Land tax reform transition fund: for 2020/21, the Land Tax Transition Fund relief will be increased from 50% to 100%, based on existing relief criteria guidelines.

Jobs Rescue Package:³² certain small business and not-for-profit entities may be eligible to receive a $10,000 grant to support the operation of their business.

Relaxed Job Accelerator Grant criteria:³³ the SA Government has relaxed the Job Accelerator Grant (JAG) criteria for the second anniversary JAG payment. The Scheme relates to new positions created between 1 July 2016 to 30 June 2018 so has been closed to new applications.

HomeBuilder grant:³⁴ 
The HomeBuilder grant is available in South Australia and the criteria is consistent with the programme in New South Wales (see above).

Payroll tax waivers: hospitality, tourism and seafood industry businesses may be eligible for payroll tax waivers for the full 2019/20 financial year.

Other business with an annual payroll of up to $5 million in Australian wages can apply, based on the impact of the virus, to have their payroll tax waived for the full 2019/20 year.

Annual Adjustment Returns are still required to be lodged by 21 July 2020.

Youth Employment Scheme: businesses that first employ a young person aged between 15 and 24 years, between April and December 2020, may be eligible for a one-year payroll tax rebate.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Land tax waiver for commercial property: land tax will be waived for commercial property for the 2020/21 financial year, where the business owner can demonstrate that their business operations have been affected by COVID-19.

Interest-free loans:³⁸ certain businesses impacted by COVID-19 with a turnover of less than $10 million may be eligible for a loan of up to five years to purchase equipment, restructure business operations, implement initiatives to improve sustainability or viability of the business or ensure that business continuity is maintained.  The loan will be interest-free for the first three years and payable at State Growth's commercial loan interest rate for the fourth and fifth years.

Fees and charges: water and electricity bills are waived for the first quarterly bill received after 1 April 2020 for certain small business customers. Electricity prices have been be capped, and water prices will be frozen in the 2020/21 financial year. Licence fees have been waived or increases frozen, and the roads component of motor tax and vehicle registration will be waived for businesses significantly impacted by COVID-19.

Various industry support measures:³⁹ government support measures include:

• primary healthcare grants (up to $10 000 for eligible general practices and community pharmacists).
• support for the tourism, hospitality, and seafood/fishery industries.

Commonwealth and Tasmanian HomeBuilder grants:⁴⁰ The Commonwealth HomeBuilder grant is available in Tasmania and the criteria is consistent with the programme in New South Wales (see above).

A further $20,000 grant is available for new homes under the Tasmanian HomeBuilder Grant (but not for the substantial renovation of an existing home).⁴¹ 

Payroll tax waiver: a one-off, six month waiver of payroll tax from April to September 2020 is available for employers operating in the categories which have been prohibited from operating due to COVID-19 such as hospitality (cafes, pubs, hotels, clubs and restaurants) and entertainment industries. 

For those who lodge their payroll tax assessment monthly, the first credit is to be applied to the March payroll tax liability (usually payable by 7 April). For those who lodge their payroll tax assessment annually, the credit will be applied to their account when their assessment is received at the end of the 2019-20 financial year.

Payroll tax deferral: businesses with Australia-wide wages of up to $10 million can defer their 2020/21 payroll tax, interest-free until 1 July 2022. Eligible businesses will need to lodge their payroll tax returns as normal but will not be required to make the associated payment at the usual time. Interest will be applied to any outstanding deferred amounts from 1 July 2022.

For those who lodge their payroll tax assessment monthly, deferral can commence for their July 2020 payroll tax liability (usually payable by 7 August). For those who lodge their payroll tax assessment annually, they can defer payment of their full 2020-21 payroll tax liability (usually payable in July 2021).

Construction deferral for payroll tax:⁴⁴ ACT businesses in the construction industry can defer their payroll tax liability, interest-free for six months from April to September 2020.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

No land tax measures have been announced.

Further support to small and medium businesses, including:⁴⁵

• Electricity rebates: small business owners with electricity usage below 100 megawatts per year will see rebates of $750 automatically applied to their next electricity bill in around June or July 2020.
• Commercial general rates rebate: commercial property owners with an average unimproved value below $2 million on their property are eligible for a rebate on their commercial rates fixed charge. Commercial rate payers will receive a credit of $2,622 (equivalent to the annual fixed charge) to their 2019-20 general rates, in quarter four.
• Licensing fee waivers: certain licensing fees will be waived for food business registration, liquor licensing, rideshare vehicle licences and taxi plate fees.
• ACT Community Clubs Package to support clubs to keep staff employed at the award rate.

Deferred rates notices: the issuance of rates notices for 2019-20 quarter 4 instalments will be deferred by 4 weeks for commercial property owners.

Review of rent charges: rent charges for commercial tenants of ACT Government properties whose operations have been significantly impacted by COVID-19 will be reviewed.

HomeBuilder grant: The HomeBuilder grant is available in the ACT and the criteria is consistent with the programme in New South Wales (see above).

Payroll tax relief: payroll tax waivers are available for the March to August 2020 return periods for employers who are listed on the NT Government's Central Hardship Register, and total taxable Australian wages for 2019-20 of under $7.5 million.

Businesses with turnover up to $50 million can be included on the Central Hardship Register if they can demonstrate a reduction in turnover of at least 30% due to COVID-19.

Payroll tax deferral: employers with estimated total Australian taxable wages above $7.5 million which are listed on the Central Hardship Register, and which had a reduction in turnover of at least 50% due to COVID-19 may defer any of their payroll tax payments between March to August 2020 until 21 September 2020 provided returns continue to be lodged.

Payroll tax exemption for hiring NT employees: extended to new hires up to 1 July 2021.

Employers may be eligible for a payroll tax exemption for up to two years in relation to wages paid to:

• a Territory resident who, when hired, increases the total number of Territory residents employed by that business;
• an existing employee of a business, who relocates from living interstate or overseas to reside in the Territory as their principal place of residence; or
• a Territory resident hired to replace a former employee who resides interstate or overseas.

JobKeeper payments: wages that are subsidised by the Federal Government's JobKeeper payments are exempt from payroll tax.

Land tax is not imposed in the Northern Territory.

HomeBuilder grant: The HomeBuilder grant is available in the Territory and the criteria is consistent with the programme in New South Wales (see above).