South Australian State Budget 2016: A Lucent View

admin Blog, Payroll, State Budget, Tax, Uncategorised

Key Items

  1. Job Creation Grant Scheme
    (source page 13 of 2016-17 Budget Measures Statement )
  • Grants will be made available for every new employee hired and maintained for two years by eligible businesses with total payrolls of $5 million or less.
  • Businesses that increase their number of South Australian employees will be eligible to receive a grant for each additional worker employed by them in a new position between 1 July 2016 and 30 June 2018. The grant will be paid at the first and second anniversary date of employment.
  • A grant of up to $10, 000 ($5000 each year for two years) for each new full time equivalent job created will be available for businesses liable for payroll tax in South Australia with total Australian wages of $5 million or less.
  • A small business and start-ups grant of up to $4000 ($2000 each year for two years) for each new job created will be available for eligible businesses not liable for payroll tax, including due to their total wages falling below the payroll tax-free threshold.

2. Extension of Small Business Payroll Tax Rebate
(source page 6 of 2016-17 Budget Measures Statement)

  • The small business payroll tax rebate introduced in the 2013–14 Budget will be extended for a further four years to 2019–20 at a cost of around $10 million per annum.The rebate provides a payroll tax saving for employers with taxable payrolls less than or equal to $1.2 million. Once the rebate has been paid, eligible employers with taxable payrolls of up to $1 million will have effectively paid payroll tax at the rate of 2.50 per cent rather than the statutory rate of 4.95 per cent. The rebate phases out for employers with taxable payrolls between $1 million and $1.2 million.It is estimated that about 2300 employers will benefit from this initiative each year, with a maximum rebate of $9800.

3. SA Made Campaign
(source page 14 of 2016-17 Budget Measures Statement)

  • This initiative provides $2 million to undertake an awareness campaign supporting South Australian products, including partnering with retailers to clearly distinguish the South Australian made products that they offer. This will enable the public to identify and purchase products and services that support South Australian jobs.A grant was made to Brand SA in 2015–16 to undertake this program, which will be launched in 2016–17.

4. Gig City Campaign
(source page 79 of 2016-17 Budget Measures Statement)

  • $4.7 million over four years has been pledged to allow Adelaide the opportunity to benefit from the city’s ultra-high speed internet to drive innovation. The program will connect up existing innovation spaces to create an entire ultra-high speed broadband innovation network, building an environment for start-ups and existing businesses to compete on a global scale.

5. South Australian Venture Capital Fund
(source page 79 of 2016-17 Budget Measures Statement)

  • The government will also establish a $50 million South Australian Venture Capital Fund to partner with private sector financiers to support innovation and help build high growth companies in South Australia.

6. Phased abolition of stamp duty on non-residential real property transfers
(source page 79 of 2016-17 Budget Measures Statement)
Initiatives include;

  • Duty rates reduced by 1/3rd from 7 December 2015
  • Reduced by a further 1/3rd from 1 July 2017
  • Abolished from 1 July 2018

Our View

We believe this budget lays some solid foundations for small business to grow in South Australia along with attracting more business and we welcome the Job Creation Incentives. Along with providing a degree of continued payroll tax relief and grants to small employers (note: we do not believe the government has addressed the real burden to small business of employing staff and worry that benefits of the grant will be offset by payroll tax), the budget allows for further investment in infrastructure creating new jobs today and continued economic growth tomorrow.  The economic outlook in the budget is for positive growth, albeit still behind national average which is an ongoing challenge for South Australia but one the government appears to be addressing with this budget.  Should the state continue to return to surplus as forecast in the budget, this will enable continued investment bringing the state closer to the national growth trend.