On Tuesday 24 November, Victorian Treasurer Tim Pallas handed down the 2020-2021 State Budget (the Budget).
The Budget, which is usually delivered in May but was postponed due to the pandemic, provides a clear outline of the toll that COVID-19 has taken on the state’s finances, and the strategy to commence recovery.
Total revenue is down 4.2% in comparison to pre-COVID levels, while state tax revenue has fallen 11.3%. The combination of the hit to revenue and billions in new spending is expected to result in a deficit of over $23 billion this year.
The budget includes a range of concessions, subsidies and projects provided by the government in a bid to get hundreds of thousands of Victorians back to work and breathe life into the economy.
The Government will increase the threshold for paying payroll tax on an annual basis rather than a monthly basis from $40 000 to $100 000, reducing administration costs to 7,000 businesses.
A tax credit will be introduced to provide incentive for small and medium businesses to rehire staff, restore hours or create new jobs.
Businesses will get a tax credit of 10 cents per dollar that they increase taxable Victorian wages. This measure will last for two years and is expected to support almost 10,000 people return to work. For example, if a business increases its taxable wages by $100,000 in 2020-21 when compared to the prior year, it will benefit from an effective reduction in its payroll tax liability of $10,000.
The Government has announced a pilot program to introduce sick leave for casual workers in ‘priority industries’. The pilot is likely to provide up to five days paid sick leave at the national minimum wage for casual employees who work in certain industries.
Small businesses will also be eligible for the Solar Homes program, with up to 15,000 rebates available to help reduce energy costs.
The government have set a target of creating 400,000 new jobs by 2025, focusing on those who were hardest hit by COVID-19 restrictions, including young people and those without formal qualifications. To help achieve this goal, $250 million has been committed to subsidise the wages of at least 10,000 workers.
To stimulate the property market, up to 50% of stamp duty will be waived on newly built or off-the-plan homes valued at up to $1 million for contracts entered into between 25 November 2020 and 30 June 2021. Existing home owners will also benefit and be eligible for a 25% waiver.
The budget announcement also confirmed that the previously announced 50% land transfer duty concession for commercial and industrial properties has been brought forward and applies to contracts entered from 1 January 2021 – rather than 1 July 2023.
A $500 million Homebuyer Fund will be launched to assist Victorians who do not have a 20% deposit to purchase a home. The fund will contribute to the purchase price in exchange for equity in the property.
The Budget contains further funding of over $250 million for individual support for those looking for work. This includes career counselling services and an extra 80,000 free TAFE courses linked to in-demand jobs.
The Budget contains funding to redevelop and improve a number of building projects throughout the state. Almost $2 billion has been allocated to school infrastructure, more than $5 billion for new public housing and almost $1.5 billion to redevelop the Southbank Arts Precinct.
A further $2 billion has been provided to build new hospitals upgrade existing ones.
The Budget will deliver free kinder for 2021 and support for more outside school hours care.
Get Active Kids Voucher Program will help children get involved in organised activities by providing $200 vouchers for sports equipment, uniforms or memberships.
The Budget includes a number of other measures including:
We expect that the details of the measures (including the eligibility criteria) will be in the State Taxation Acts Amendment Bill 2020, on receipt of more details around the business incentives we will share them with you.
To read more about all the support measures included in the budget, click here to view the Budget Papers.
You can also view the Victorian Budget 20/21 website here: https://www.budget.vic.gov.au/
Please contact our team if you have any questions in relation to the Victorian Budget and how it affects you. Call 03 5443 0344 or via email@example.com