The Victorian State Budget 2023-24 was handed down on the afternoon of 23 May 2023 by Treasurer Tim Pallas. It is a budget focusing on debt recovery rather than business resilience or growth and much of the burden of debt recovery will be borne by Victorian businesses.
Importantly for businesses, the budget contains several proposed changes to Victoria’s tax regime, the most substantial of which relate to payroll tax, land tax and a reform for commercial and industrial property stamp duty.
A 10 year Debt Levy is being introduced that targets any business with a national payroll above $10 million with a 0.5% increase on top of existing payroll tax rates. Businesses with a national turnover of over $100 million will incur a 1% increase in payroll tax rates. These changes are due to come into effect on 1 July 2023.
Conversely, many smaller businesses with wages below $1 million will not be subject to Payroll Tax due to an increase in the tax free threshold. The schedule for changes start from 1 July 2024 with the payroll tax-free threshold increasing from $700 000 to $900 000, and subsequently increases to $1m from 1 July 2025.
There is a lack of detail surrounding the announcement of the end to stamp duty for commercial and industrial property which will be replaced with an annual property tax. Further clarity on what will be considered or defined as industrial and commercial property will be required shortly.
Several large projects are being paused with a tightening of funding, notably the Melbourne Airport Rail Link and Geelong Fast Rail projects which have not been mentioned as part of this year’s transport and infrastructure budget measures. Importantly for the northern Melbourne suburbs there is funding of $207 million to upgrade Mickleham Road between Somerton Road and Dellamore Boulevard, including intersection upgrades, bus priority infrastructure and shared user paths.
Funding for the promised Technical School on the Kangan Broadmeadows campus and also the Kangan Sunbury campus have also been confirmed.
The Budget has announced some support to manufacturing businesses notably through the Made in Victoria program which will primarily seek to expand and retain strategic sovereign manufacturing capability in Victoria. Funding will also be provided to support exporters to expand and strengthen their connection to international markets, including through the delivery of inbound and outbound trade missions.
We will bring you more news on these as they develop.