Payroll Tax (Exemption For Small Business) Amendment Bill

The Hon. R. SANDERSON (Adelaide—Minister for Child Protection) (20:45): I rise to speak on the Payroll Tax (Exemption for Small Business) Amendment Bill. It is with great pleasure that we were elected on a platform of more jobs, lower costs and better services for South Australians, and this is part of our key platform. It is wonderful to be delivering on that in our first 100 days. South Australia is a small business state, with 98 per cent of businesses in 2016 being considered small businesses; that is, they employed fewer than 20 people. This amendment will directly help those small businesses to move on to build bigger businesses.

South Australia's current unemployment rate of 5.7 per cent is trending down with the new government. This will further benefit businesses in South Australia as, from 1 January 2019, businesses will have extra money and room in their payroll to hopefully either put on extra employees or buy more services or goods for their businesses, such as computers, or even just spend the money in our economy. No matter where they spend the money, it is money available that can be spent to grow other businesses and the economic wealth of our state.

Under the existing act, payroll tax is levied on taxable wages at a rate of 4.95 per cent above the annual tax-free threshold of $600,000. The changes in this bill will mean that businesses with annual taxable payrolls below $1.5 million will no longer be liable for payroll tax from 1 January 2019. These changes are expected to benefit around 3,600 businesses, reducing the payroll tax they pay by an estimated $44 million each year, with individual businesses saving up to $44,550 per annum. It is estimated that 3,200 of these businesses will be exempt from payroll tax, and 400 will receive a reduction in their payroll tax liability. This represents around 39 per cent of our current payroll tax payers who will no longer need to pay payroll tax or will pay a lower tax rate.

These changes will remove a major disincentive to businesses, creating more jobs and employing more people, as well as making South Australia a much more attractive place to invest in and grow a business. To provide certainty for businesses, the government will continue to administratively implement until 31 December 2018 the small business payroll tax rate measure introduced by the former government. The measure reduces the effective tax rate payable to 2.5 per cent for businesses with taxable wages of up to $1 million per annum. The rate then progressively increases to 4.95 per cent for businesses with taxable wages above $1.5 million.

I had my own business for 18½ years. In many small businesses you always need that extra staff member before you can actually afford them, so people do overtime or they work back. You work extra hard, and you might work weekends or evenings as the business owner because you just cannot quite afford the next staff member when you really need them to expand your business. So this is a wonderful opportunity that will save up to $44,550 for some businesses. It is a great opportunity to take on even a part-time staff member and really relieve the pressure and allow the business to continue to flourish. There are pinch points in a business, and often that is employing extra staff. Reducing the payroll tax burden will go a long way to helping small businesses expand and take on extra staff.

Small business is incredibly important in South Australia. They really are the backbone and the major employer. We know that although we have a lot of people employed in the Public Service, it is businesses paying the tax that allow us to pay for all the people who are in the Public Service, so we need to support small businesses and help them grow so that they pay more taxes and employ more people who pay taxes and it all gets spent back in our economy.

This really is a wonderful step and I am very proud to be part of a Liberal government, led by Steven Marshall, that is implementing such a positive policy that will help businesses. This is a step in the right direction, and it shows the Liberals' commitment to more jobs, lower costs and better services. As the member for Heysen also pointed out, this is a tax that was paid whether you made a profit or not, so there are businesses that could be paying thousands in payroll tax that actually make a loss that year, or make a very small profit. This legislation is a great way to help businesses and it can only be seen as good news. I commend the bill to the house.