Key Australian State tax developments and other measures in response to COVID-19 - Further update

25% payroll tax reduction: businesses with total grouped Australian wages of $10 million or less for the 2019/20 financial year had their annual tax liability reduced by 25% when they lodged their annual reconciliation (due on 30 October 2020⁴).

Tax deferral:⁵ businesses were able to defer their March to September 2020 payroll tax payments until October 2020, and could then either pay in full or enter into an instalment plan under the Stimulus Payment Arrangement. The Stimulus Payment Arrangement can be up to 24 months with the first 12 months being interest-free.

Increased payroll tax threshold: the payroll tax threshold for the financial year commencing 1 July 2020 increased from $900,000 to $1.2 million. Eligible businesses will not be subject to payroll tax in 2020/21.

Reduced payroll tax rate: the payroll tax rate for 2020/21 and 2021/22 is temporarily reduced from 5.45% to 4.85%.

JobKeeper payments: The additional wages paid to employees to meet the requirements of the JobKeeper scheme are exempt from payroll tax.⁶

Land tax reduction: commercial and residential landlords may receive a reduction of up to 50% 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; 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.

The 50% reduction for the 2020 land tax year is divided into reductions of up to 25% of the total annual land tax for two periods (1 April to 30 September 2020, and 1 October to 31 December 2020).

Where land tax for the 2020 tax year has already been paid, eligible landowners will be able to apply for a refund. Applications close on 31 January 2021.

There is a separate 25% reduction for the period between 1 January to 28 March 2021 but this is limited to retail leases where the annual turnover of the tenant is less than $5 million and the tenant has a 30% decline in turnover for the December 2020 quarter (or 15% decline for non-profits).

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 had also deferred the collection of the gaming machine tax and parking space levy through making available payment arrangements.

$10,000 Small Business and Southern Border 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. Certain NSW businesses impacted by the border closure between NSW and Victoria may also be eligible for grants of up to $10,000 under the Southern Border Support Grant. Applications for both grants have closed.

Small Business Recovery Grant:⁷ 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. Applications for the grant have closed.

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.

First home buyer assistance scheme: the thresholds for the first home buyers assistance scheme have been increased for contracts executed from 1 August 2020 to 31 July 2021 for new homes and vacant land on which a new home is intended to be built.  There is no change to the thresholds for purchasing existing homes.