The Queensland Government handed down its 2022-23 State Budget on Tuesday 21 June 2022.
The budget included the following revenue measures:
- A new payroll tax mental health levy for large employers
- Payroll tax relief for small and medium businesses
- Duty exemption for retirement visa holders
- Land tax changes to include interstate holdings
- Freeze on coal royalties will cease
- Extended apprentice and trainee rebate
What is the new payroll tax mental health levy for large employers?
A new payroll tax levy of 0.25% of an employer’s (or group’s) annual Australian taxable wages above $10 million will be introduced, plus an additional 0.5% levy of annual Australian taxable wages above $100 million. With this levy in place, this means the maximum payroll tax rate in Queensland is 5.7% for employers (or groups) over the $100 million threshold.
The levy is intended as an ongoing funding model for mental healthcare services in Queensland. This follows Victoria, where a payroll tax mental health levy has been in place since 1 January 2022. However, the rate of the levy in Victoria for wages between $10 million and $100 million is 0.5% (double the rate of the proposed levy in Queensland).
When will the new levy apply?
The levy will apply for payroll tax liabilities arising on or after 1 January 2023, subject to the relevant legislation passing.
Payroll tax relief for small and medium businesses
An increase in the payroll tax deduction framework ceiling is intended to provide payroll tax relief for small and medium businesses. The payroll tax deduction ceiling will be extended from the current $6.5 million in annual Australian taxable wages up to $10.4 million.
The increase in the payroll tax deduction ceiling reflects an increase in the phase out rate of the deduction from $1 for every $4 to a rate of $1 for every $7 of taxable wages above the $1.3 million threshold, benefitting over 12,000 businesses.
When will the deductions apply?
The payroll tax deduction will apply for payroll tax liabilities arising on or after 1 January 2023, subject to the relevant legislation passing.
Additional foreign acquirer duty exemption for retirement visa holders
Retirement visa holders (subclass 405 and 410 visa holders) will now be exempt from additional foreign acquirer duty (AFAD) on purchasing their principal place of residence. AFAD is currently levied at a rate of 7% on acquisitions of residential land by foreign persons, in addition to the primary base duty of 5.75%.
When will the duty exemption apply?
The duty exemption will apply to purchases on or after 1 January 2023, subject to the relevant legislation passing.
Land tax changes to include interstate holdings
Also introduced in the budget were changes to land tax to include interstate landholdings. Under the proposed new land tax measures, Queensland liabilities will now be calculated based on an individual’s total Australian landholdings.
Land tax will be calculated based on the notional land tax of an individual’s total Australian non-exempt landholdings at midnight on 30 June 2022. Queensland liabilities will then be calculated as the taxpayer’s notional land tax, multiplied by the individual’s Queensland landholdings as a proportion of their total Australian landholdings.
When do the changes take effect?
The land tax changes take effect from 1 January 2023 and will apply to land tax liabilities for the 2023-24 land tax year onwards.
Freeze on coal royalties will cease
The ten-year freeze on coal royalties will cease on 30 June 2022. Three progressive royalty tiers will apply from 1 July 2022.
Value per tonne
$176 – $225
$226 – $300
20% of the value for the first $225
30% for the value of the balance
More than $300
20% of the value for the first $225
30% of the value for the next $75
40% for the value of the balance
Each tier will apply based on the appropriate margin, aligning with the current tiered rates introduced ten years ago. The current tiers will only apply to coal with a value of $175 or less per tonne.
Extended apprentice and trainee rebate
The 50% payroll tax rebate on exempt apprentice and trainee wages has been extended for one more year, making it available until 30 June 2023. The maximum rebate that can be claimed is equal to the payroll tax amount for that liability.