Payroll tax changes: advice to small businesses

Rokeby Road Subiaco Picture: Andrew Ritchie www.communitypix.com.au d487864a
Rokeby Road Subiaco Picture: Andrew Ritchie www.communitypix.com.au d487864a

IN good news for small business owners, particularly those in labour intensive industries such as health care, hairdressing and hospitality, the State Government’s recent announcement to a change in payroll tax will come as welcome news.

WA businesses with annual payrolls of up to $850,000 are currently exempt from payroll tax.

However, from 1 January 2020 this threshold will increase to $950,000, increasing again on 1 January 2021 to $1 million.

It’s estimated that around 12,000 businesses will benefit from this change; 11,000 enjoying a reduced tax bill and a further 1000 no longer reaching the payroll tax threshold.

This will lower the costs associated with hiring additional staff and if you’re a small business owner it could be the perfect time to reassess your business operations.

Perhaps this is the time to explore more opportunities to expand your business and to employ more staff.

The Chamber of Commerce and Industry WA estimates that the first change to the tax threshold could create almost 900 jobs.

It is of course important to note that many small businesses are sole traders.

But if these enterprises employed just one person it would create an additional 143,000 new jobs for Western Australians.

Employing the right staff can bring many benefits for your business, including boosting levels of customer service.

Providing great service is what will keep your customers coming back, and sharing news of their great experiences with friends and family.

It’s also an area where small businesses can really have an edge over their larger competitors.

Before jumping in to start employing staff it’s important to do your homework including gaining a good understanding of relevant pay awards and which industrial relations systems will apply to your business.

In general, the national system applies to incorporated business – those with ‘Pty Ltd’ or ‘Ltd’ in their name, while the state system applies to sole traders, unincorporated partnerships and some trusts.

If your business comes under the national system, the Fair Work Ombudsman can provide assistance and information to meet your employer obligations.

In the state system, Wageline is the place to go.

If you’re looking for general information about employing staff, the Small Business Development Corporation website provides a wealth of information.

Visit smallbusiness.wa.gov.au.