SA State Budget 2017

On the 22nd of June 2017 the Treasurer Mr Tom Koutsantonis released the 2017-18 State Budget.

The budget estimates has the State delivering surpluses every year from 2015-2016 through to 2020-2021. With the State facing the challenges of the closing of Holden’s the budget is focused on working with business to create jobs.

Key initiatives include a $200 million future jobs fund a $1.1billion investment to modernise the health system, spending on infrastructure projects, growth in education and an innovative neighbourhood project scheme.

The key tax measures are outlined below:

 

 

Payroll Tax

The State Government has announced changes to the rate of payroll tax in South Australia.

The rate of payroll tax will be reduced to 2.5% for small businesses with payrolls between $600,000 and $1m.  This effectively replaces the existing ‘temporary’ small business payroll tax rebate for those businesses.

The temporary rebate has been extended to businesses with payrolls of between $1m and $1.5m.  This is in an increase from $1.2m.

The following changes have been summarised in the following two tables:

 

Annual Payroll Payroll Tax
Without Rebate
Payroll Tax
With Rebate
Savings to
Business
Extra Savings
Under Permananet
Measure

$650000

$2475

$1250

$1225

 

$700000

$4950

$2500

$2450

 

$800000

$9900

$5000

$4900

 

$900000

$14850

$7500

$7350

 

$1000000

$19800

$10000

$9800

 

$1000001

$19800

$10000

$9800

$2000

$1050501

$22275

$12353

$9922

$3397

$1100001

$24750

$14950

$9800

$5050

$1150001

$27225

$17793

$9432

$6957

$1200001

$29700

$20880

$8820

 

$1250001

$32175

$24213

$7962

 

$1300001

$34650

$27790

$6860

 

$1350001

$37125

$31613

$5512

 

$1400001

$39600

$35680

$3920

 

$1450001

$42075

$39993

$2082

 

$1500000

$44550

$44550

$0

 

Australian Payroll Statutory Tax Rate Tax Rate With Rebate

$600001 to $1000000

4.95%

2.50%

$1000000

4.95%

2.50%

$1100000

4.95%

2.99%

$1200000

4.95%

3.48%

$1300000

4.95%

3.97%

$1400000

4.95%

4.46%

Above $1500000

4.95%

4.95%

Australian Payroll Statutory Tax Rate Tax Rate With Rebate

$600001 to $1000000

4.95%

2.50%

$1000000

4.95%

2.50%

$1100000

4.95%

2.99%

$1200000

4.95%

3.48%

$1300000

4.95%

3.97%

$1400000

4.95%

4.46%

Above $1500000

4.95%

4.95%

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Jobs Accelerator Grant (JAG) – Increase by $5,000

To enhance the employment rate among younger South Australians, the State Government has announced that businesses that register a new employee for a Job Accelerator Grant (JAG), who is employed as an apprentice or trainee, will receive an extra $5,000.

The JAG scheme was announced in last year’s budget and almost 10,000 positions have been registered with the scheme.

The scheme originally offered a grant of:

  • $10,000 over 2 years for each new full-time equivalent job created in small to medium businesses with a payroll between $600,000 and $5 million
  • $4,000 over 2 years for each new 22 hours or more job created in small businesses with a payroll less than $600,000

The above grants will still be offered under the same conditions, with the $5,000 available if the new staff member is an apprentice or trainee.

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Future Jobs Fund

To address the state’s unemployment rate and the decline in the manufacturing sector, the State Government has announced a $200 million ‘Future Jobs Fund’.

The $200 million fund is comprised of:

  • $50 million of grants and $70 million of low-interest loans to support job creation in the following industries:
    • Shipbuilding and defence
    • Renewable energy and mining
    • Tourism, food and wine
    • Health and biomedical research
    • IT and advanced manufacturing
  • Applications for the above grants and loans with the Department of Treasury and Finance are now open. The closure dates are:
    • For Business Case Funding – 14 July 2017
    • For Grants and Loans – 29 September 2017
  • $50 million of grants and $30 million of low-interest loans allocated to other measures to support job creation, capital investment, construction jobs and increased economic activity. This includes:
  • $5 million over the next 2 years to support the automotive supply chain ahead of Holden’s closure
    • $60 million to secure new investment in South Australia
    • $14.5 million over the next 4 years to secure major events and business conventions to strengthen the tourism sector

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Conveyance duty surcharge on foreign buyers of residential property

A stamp duty surcharge of 4% will be introduced for foreign purchasers of South Australian residential property (from 1 January 2018).  There are provisions for refunds (where the purchaser later ceases to be a foreign person) or retrospective imposition (where the purchaser later becomes a foreign person).

New South Wales, Victoria and Queensland also levy a similar surcharge on foreign buyers of certain property and Western Australia has indicated that it will introduce a surcharge in 2019.

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Bank Levy

The State Government will introduce a South Australian major bank levy from 1 July 2017. The levy will apply to all authorised deposit-taking institutions that operate in South Australian and are liable for the Commonwealth Government major bank levy announced in the 2017/18 Federal budget.

The amount payable under the South Australian major bank levy will be 0.015% of South Australia’s estimated share of the total value of bank liabilities subject to the Commonwealth Government major bank levy at the end of each quarter.

It is expected the measure will raise approximately $370 million over the next four years, with the following major banks liable to pay Commonwealth Bank, National Australia Bank, ANZ, Westpac and Macquarie Bank.

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Off-the-plan apartment tax concessions and incentives

A series of tax concessions and incentives to encourage the purchase of apartments off-the-plan.  The tax concessions and incentives are briefly outlined below:

Extend the off-the-plan apartment stamp duty concession

Extend the off-the-plan apartment stamp duty concession

The current stamp duty concession for purchases of off-the-plan apartments due to expire on 30 June 2017 has now been extended for a further 12 months.

The current stamp duty concession for purchases of off-the-plan apartments due to expire on 30 June 2017 has now been extended for a further 12 months.

Eligible contracts entered into for the purchase of an off-the-plan apartment by 30 June 2018 will receive a stamp duty concession of up to $15,500. The level of concession received varies depending on the value of the apartment and the stage of completion of the residential development. The concession applies South Australia wide.

Introduce a five year land tax exemption for investors

An exemption from land tax for up to five years will be introduced for investors who purchase eligible off-the-plan apartments.

The land tax exemption will apply for off-the-plan apartment contracts entered into between 22 June 2017 and 30 June 2018. The exemption will apply for the five years from the commencement of ownership.

Introduce a pre-construction grant

A grant of $10,000 will be introduced for purchases of off-the-plan apartments where construction of the apartment building has not yet commenced and the sale contract is entered into on between the 22 June 2017 to 30 September 2017. The grant will be paid at settlement.

This grant is in addition to the off-the-plan stamp duty concession which has now been extended.  When combined with the extension of the off-the-plan stamp duty concession, eligible recipients can receive up to $25,500 in assistance for purchases of off-the-plan apartments. Eligible first home buyers will be able to receive up to $40,500 in assistance (this includes the $15,000 SA First Home Owners Grant).

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If you have any questions about the tax issues contained in this summary, please contact our Tax Director Malcolm Wight or Tax Manager Andrew Nicola via email or on (08) 8409 4333