Looking to employ? Would you like a tax break with that?
With calls for tax reform to regenerate the economy in full swing, one could be forgiven for overlooking the fact there are considerable incentives already in place. These are not always given the profile or fanfare they deserve – even by the federal and state governments that bring them in.
One area that is often overlooked is the payroll tax incentives and wage subsidies for taking on unemployed people. From the beginning of this month the Federal Government established a generous federal wage subsidy for employers: $10,000 for older (50+) workers; $6,500 for younger workers (below 30); a $6,500 parent subsidy for recipients of parenting or carers payment; $6,500 for long-term unemployed; and $6,500 for Tasmanian jobs.
These could easily tip the balance for businesses deciding whether or not to recruit a new employee falling into those categories. And the good news is that these are on top of, not duplicative of, various state-based payroll tax initiatives.
For some time I have been publicly advocating that employers take a closer look at these, because levels of awareness are still too low.
NSW has led the way in recent years with its 2011 Jobs Action Plan, under which a $4000 cash rebate was given for any new employee. This was extended to $5,000 from 1 July 2013, and has now been extended for the next four years – until 30 June 2019. There is also a one-off cash rebate of $1,000 for employment of a worker made redundant by a designated employer, as of January 2014.
But NSW employers need to be alert – there is an important change coming up very soon. The NSW Office of State Revenue (OSR) has recently released a ruling indicating that the current practice of allowing employers to retrospectively register roles under the NSW Jobs Action Plan will change with effect from 23 November 2015.
Instead, from that date the Chief Commissioner will accept applications for retrospective registration without justification only if the application is made with OSR within 90 days after the employment to which the registration relates commenced. More than that, and a full submission is needed to convince the Chief Commissioner as to why it should be accepted. So move quickly NSW employers!
But the really good news is in my own home state of Victoria. The Back to Work scheme was revamped from 1 November 2015 and the previous $2,000 payroll tax incentive scheme for taking on an unemployed worker of more than 6 months, has been raised to an eye-catching $12,000. And the incentive for younger or those retrenched within 3 months has been raised from $1,000 to $5,000. These are sums which should make a serious impact on the recruitment prospects of unemployed people.
In Queensland too, there is an important new development in this area. Wages paid to apprentices and trainees will be exempt from payroll tax until June 2018, while a 25 percent rebate (calculated on the wages paid to apprentices and trainees) can also be claimed by the employer to reduce periodic liability. Meanwhile in Tasmania, in addition to the federal scheme, the state jobs program gives a rebate equivalent to the total level of payroll tax payable for each position.
Unemployment in Australia is hovering around the 6 percent mark, but the federal and state governments cannot be accused of not using the tax system to try and make inroads into that number. Although they might need to look again at how they publicise the opportunities they are providing. Employers need to ensure they actively consider the generous incentives that are now available.