MELBOURNE, June 22, 2025
Tax threshold increase could save businesses up to $14,500 each
Payroll tax changes are expected to reduce the tax burden on thousands of businesses.
- Payroll tax-free threshold to rise from $900,000 to $1 million on July 1.
- An estimated 28,000 businesses will pay less tax.
- 6,000 businesses will be exempt from the tax.
- Businesses could save up to $14,500 each.
- Goverment to scrap planning permits for liquor licensing on July 1.
Thousands of Victorian businesses are poised to breathe a sigh of relief. These businesses will soon experience a lighter tax burden thanks to upcoming payroll tax changes.
How will the Victorian payroll tax changes benefit businesses? These changes include an increase in the payroll tax-free threshold, a move expected to save many businesses money. This adjustment, effective July 1, will raise the threshold from $900,000 to $1 million.
Tax Cuts for Thousands
Premier Jacinta Allan anticipates that approximately 28,000 businesses will see their tax bills decrease. An additional 6,000 businesses will be fully exempt from payroll tax. Allan acknowledged that these tax cuts woudl necessitate adjustments to the state budget amid forecasts of high debt levels.
“Yes,this does require an adjustment to our budget and our revenue,but this is an investment in business and jobs and growth,” Ms.Allan stated.
Payroll tax was projected to be the government’s largest revenue source in the 2025/26 financial year.
Did you know?-payroll tax is calculated on the total wages a business pays to its employees.It is a state-based tax, meaning the rules and rates vary across Australia. The revenue generated is used to fund state services.
Significant Savings Expected
Treasurer Jaclyn Symes estimates that affected businesses could save up to $14,500 individually.
“That has obviously been something that we’ve factored in over the forwards [projections],” Symes said.
Red Tape Reduction
In addition to the payroll tax changes, the government is also set to cut red tape within the planning system. Starting July 1, businesses will no longer need to apply for planning permits for liquor licensing.
Liquor Control Victoria will assume responsibility for liquor license decisions. Local councils will lose their power to deny planning permits.
Reader question:-How do you think the shift of liquor licensing decisions from local councils to Liquor Control Victoria will affect your local community and its businesses?
Hospitality Sector Reacts Positively
Bendigo restaurateur and publican Paul Jarman, who operates four venues across Bendigo and Echuca, including the Stella Wine Bar and Café and Kennington Tavern, welcomed the changes.
Jarman noted that while the increase to $1 million wouldn’t affect him directly, it would benefit larger hospitality venues.
“running a small business to medium business in Victoria is tough going at the moment, especially hospitality,” Mr. Jarman said. “So, it is much appreciated and will make some difference we hope.”
Mixed Reactions from regional Businesses
Business Wodonga chief executive Graham Jenkin said the changes to licensing requirements would be beneficial for regional restaurants and cafes.
“This is great as Victoria really has more red tape than any other state government in Australia, so anything that can reduce red tape which is an obstacle to doing business,” Mr. Jenkin said. “Business owners don’t want to be spending all of their time doing reports.”
However, Jenkin added that payroll tax changes would not significantly impact small businesses still recovering from COVID.He suggested that a range of targeted measures are needed to support small-to-medium businesses in Victoria.
Pro tip:-Businesses should review their payroll and financial projections to accurately estimate the impact of the tax threshold increase. Consider consulting with a financial advisor to optimize tax strategies.
“A lot of very small businesses will of course see no benefit from it,” he said.
Mr. Jenkin suggested subsidizing council rates or reducing the Victorian emergency services and volunteers fund levy.
He also emphasized the need for more training and progress workshops in regional areas and increased mental health support for business owners facing financial difficulties.
To licensing requirements would be beneficial for regional restaurants and cafes.
“This is great as Victoria really has more red tape than any other state government in australia, so anything that can reduce red tape which is an obstacle to doing business,” Mr. Jenkin said. “business owners don’t want to be spending all of their time doing reports.”
However, Jenkin added that payroll tax changes would not considerably impact small businesses still recovering from COVID.He suggested that a range of targeted measures are needed to support small-to-medium businesses in Victoria.
Pro tip:-Businesses should review their payroll and financial projections to accurately estimate the impact of the tax threshold increase. Consider consulting with a financial advisor to optimize tax strategies.
“A lot of very small businesses will of course see no benefit from it,” he said.
Mr. Jenkin suggested subsidizing council rates or reducing the Victorian emergency services and volunteers fund levy.
He also emphasized the need for more training and progress workshops in regional areas and increased mental health support for business owners facing financial difficulties.
Beyond the Tax Threshold: Additional Support for Victorian Businesses
While the payroll tax threshold increase offers significant relief, business leaders emphasize the importance of additional measures to support Victoria’s economic recovery. Targeted assistance is needed to address the diverse challenges faced by businesses of different sizes and in various sectors.
What other support is being considered for Victorian businesses? Discussions are underway about further ways to bolster Victorian businesses.These discussions include potential subsidies, levy reductions, and expanded mental health support.
The Call for Targeted Measures
The recent declaration of payroll tax changes has sparked a broader conversation about the kinds of support needed by Victorian businesses. Business groups, like Business wodonga, are advocating for a multi-faceted approach that considers the specific needs of different business segments. This includes acknowledging the challenges of businesses still grappling with the economic fallout of the COVID-19 pandemic.
One common suggestion is the potential for subsidizing council rates, which can be a considerable expense for manny companies. Another proposal involves reducing the victorian emergency services and volunteers fund levy, a charge that all businesses pay. The aim of these and other measures is to create a more business-friendly habitat.
Graham Jenkin’s comments highlight the reality that the payroll tax threshold increase, while positive, won’t benefit every company. Subsidies and levy reductions would provide broader support. They would also help businesses that are small or have lower overall wage bills.
Focus on Regional Areas
Mr. Jenkin and others are urging the government to prioritize initiatives specifically tailored to regional areas. The focus on regional is critical. It acknowledges that businesses outside of major metropolitan centers often face unique challenges, such as higher operating costs and infrastructure limitations.
The proposed solutions include:
- More training and progress workshops to provide skills development and business acumen.
- Increased mental health support to address the stresses faced by business owners.
- targeted financial assistance to help businesses facing financial difficulties.
These regional initiatives could create a more robust and resilient business environment throughout Victoria.
Mental Health Support: An Urgent Need
A key area of concern is the mental health of business owners. Research shows business owners frequently enough experience high levels of stress related to financial pressures, long working hours, and the obligation of managing staff. Providing accessible mental health services is vital to the well-being of business owners and the overall economic health of Victorian communities.
What are the main challenges facing Victorian Businesses? Business owners face considerable challenges,including high operating costs,economic uncertainty,and mental-health issues. addressing these issues is vital for maintaining a vibrant and thriving business environment.
Proactive Steps for Business Owners
The government is providing some solutions. However, business owners can take steps to improve their financial situation. Here’s a look at some proactive steps:
- Review Your Finances: Perform a comprehensive review of your business financials, including income statements, balance sheets, and cash-flow projections, to clarify the financial health.
- Seek Professional Advice: Engage with financial advisors,accountants,and other professionals to help optimize business strategies.
- Explore Government programs: Access government programs and grants, particularly those designed to assist small businesses, the hospitality sector, or regional companies.
- Network and Collaborate: Interact with other business owners, share industry knowledge, and explore cooperative opportunities.
- Prioritize Mental Health: Prioritize mental and physical health,seeking the support of mental health professionals when needed.
By embracing these additional strategies, business owners can position themselves for success. These strategies can enhance their ability to navigate any economic challenges.
Success Tip:-Proactively managing finances and seeking professional assistance will improve your company’s chances of maximizing the benefits of these new changes.
The Road Ahead
The recent payroll tax changes, together with the reduction of red tape, are a step in the right direction. Policymakers and business leaders continue to discuss and refine strategies to promote economic growth. The goal remains to create a dynamic and supportive environment for businesses across Victoria.
By addressing the challenges faced today, Victoria’s economy can be positioned for enduring success, benefiting both business owners and the broader community.
Table of Contents
