The NSW Government has tabled a 2020-21 State Budget which is very much focused on job creation and the improvement of government services, whilst continuing to keep people safe.
Projected deficit of $16bn (2019-20 deficit $6.9bn). Return to surplus by 2024-25
$29bn committed to economic support measures (including pre-budget measures) in response to the COVID-19 crisis and recession
$107.1bn pipeline of infrastructure projects
$29.3bn in recurrent and capital funding of the health system
Approximately $1.4bn investment in schools infrastructure
Additional $700m for digitisation transformation of government services via a $1.6bn Digital Restart Fund
$500m of digital vouchers for hardest hit sectors (dining, arts and entertainment industries)
Reform agenda to be undertaken for tax (a possible transition away from transfer duty), Government’s planning system, labour force flexibility and regulatory regimes
Other measures in support of mental health, extended free pre-school scheme, renewable energy and education were included in the budget.
Significant Tax Measures
Payroll tax rate is to be cut from 5.45% to 4.85% for a 2-year period, backdated to 1 July 2020. The payroll tax threshold will also be permanently increased from $1 million to $1.2 million
Small and medium sized businesses that do not pay payroll tax will be provided with $1,500 in digital vouchers to cover the cost of government fees and charges
Jobs Plus Program for companies who relocate their Head Offices or expand their jobs footprint in NSW (from 15 December 2020 until 30 June 2022) will be entitled to payroll tax relief, up to a 4-year period, for every new job created where a business creates at least 30 new net jobs
Landlords land tax relief for the 2020 land tax year, of up to 50 per cent of the land tax liability relating to their land leased. This Budget extends this support to provide land tax relief of up to 25 per cent for the 2021 land tax year for landlords of retail tenants. Will be available to landlords who provide rent reductions between 1 January 2021 to 28 March 2021, and to eligible retail tenants experiencing financial distress due to the pandemic.
Opportunities for growth and stability
The economic reform agenda provides the ideal opportunity to both repeal inefficient taxes such as Stamp Duty as well as cut much of the red tape that tends to stifle economic activity
Proposed expenditure covers almost every sector with particular focus on construction, education and health as the major beneficiaries of the proposed funding boosts
The focus on building NSW’s presence on the global stage bodes well for new burgeoning industries, particularly in digital technologies, as well as sectors that were on the incline before the pandemic such as health and education
While the substantial funding provided in the past via GST, stamp duty and payroll tax has been substantially reduced the Government is contemplating the privatisation route to make up the shortfall.
Did the NSW Budget deliver what you ordered?
It has been an extraordinary year of upheaval as the nation and NSW in particular grapples with the effects of COVID-19 and we recognise that everyone has been impacted in different ways. Reach out to one of our experts below for assistance navigating the implications and opportunities this Budget presents for you, your business and your industry.