Like most state and territory governments, the NSW State Government has faced unprecedented economic and fiscal challenges in 2020, starting with drought, bushfires and then the Covid-19 pandemic. While there has been a contraction in the economy, this has been less severe than first feared and there are signs of recovery.
The latest NSW Budget, released by Treasurer Dominic Perrottet, focuses on economic reform to drive future prosperity and growth, including regulatory change to support real productivity gains. The budget also includes additional payroll tax concessions and other incentives to attract businesses to relocate from interstate or overseas, and for existing businesses to expand their operations in NSW.
The NSW Government has taken swift action to reduce the impact of Covid-19, and much of this was already underway, especially with substantial investment and spending on infrastructure projects and injections of fiscal support helping to keep the economy buoyant. There will be additional investment in infrastructure with another substantial four year infrastructure program totalling $107 billion.
This year the NSW Budget focused on three key areas:
1. Supporting businesses
2. Creating jobs
3. Property tax relief and reform
1. Supporting business
1.1 Payroll tax concessions
With retrospective effect from 1 July 2020, the NSW payroll tax rate will be reduced from 5.45% to 4.85% for a period of two years. This is throwing down the gauntlet to other states as it will be the equal lowest headline rate in Australia.
In addition, the payroll tax tax-free threshold is to be permanently increased from $1m to $1.2m.
1.2 Stimulus for NSW restaurants, cafes and visitor sites
The NSW Government aims to encourage and stimulate spending by injecting up to half a billion dollars in the Out and About program. Restaurants, cafes, visitor sites and cultural attractions have been hard hit by the pandemic and every adult resident will be eligible to claim up to $100 in digital vouchers to spend on eating out and entertainment. To access the digital voucher you will need to connect to the Service NSW app.
1.3 SME red tape subsidies
Small and medium enterprises who are not liable to payroll tax will be provided a $1,500 “digital voucher” to assist in covering the cost of government fees and charges.
2. Creating jobs in NSW
2.1 The ‘Jobs plus program’
The NSW Government will be introducing a “Jobs Plus Program” that will operate over a two and a half year period from 15 December 2020 to 30 June 2022. Under the program, eligible businesses that relocate their head office to NSW or expand the number of employees in the state can obtain payroll tax relief up to a four year period. Other incentives are also proposed.
2.2 Interstate licences
Interstate licences and qualifications are proposed to be recognised in NSW in order to boost the ability for interstate workers to trade in the state.
2.3 Getting women back into the workforce
Women will be encouraged back to the workforce with return to work grants of up to $5,000. To help women remain in the workforce there is a new paid leave policy for the NSW Public Sector – 14 weeks available leave for eligible women.
3. Property tax relief and reform
3.1 Extension for retail tenant / landlord relief
For retail tenants with annual turnover of less than $5m, a temporary extension of the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles has been extended up to 31 March 2021. This means that landlords who provide rent relief between 1 January 2021 and 28 March 2021 to eligible tenants affected by the Covid-19 pandemic can apply for land tax relief of up to 25% for the 2021 land tax year.
3.2 Opting out of Stamp Duty
The NSW Government is also proposing to overhaul stamp duty by giving buyers an option to not pay stamp duty at the time of purchase but rather pay an annual property charge. This will be subject to further consultation and community feedback.
Other areas – not-for-profit sector
Charities and the not-for-profit sector have not been forgotten either. The Government recognises the challenges they have faced with the combined catastrophes of the bushfires and the pandemic. A new $50 million dollar fund will be made available.