Apprentices, trainees key to payroll tax reform as SA businesses struggle

Apprentices, trainees key to payroll tax reform as SA businesses struggle

Posted on: 31 May 2024

The Opposition is calling on the Malinauskas Labor Government to tackle South Australia’s skills shortage with payroll tax exemptions for apprentices and trainees, while also increasing the current payroll tax threshold.

To support struggling small businesses through the cost of living crisis, South Australia’s payroll tax threshold must be increased to $2.1 million from $1.5 million.

Payroll tax is calculated on wages an employer pays to its employees and is triggered when a business exceeds $28,846 per week in salaries.

The Opposition also wants to see exemptions for apprentices and trainees, providing additional incentive for businesses to take on new-to-industry employees, which will help address South Australia’s costly skills shortage.

The calls support those of the South Australian Business Chamber, who are urging the Malinauskas Labor Government to reform payroll tax in the upcoming State Budget.

A Speirs Liberal Government elected in 2026 is committed to a payroll tax overhaul if these crucial and much needed changes are ignored by Peter Malinauskas.

Leader of the Opposition, David Speirs, said the Liberal Party’s proposed changes work as a double-pronged initiative.

“South Australia is in the grips of a skills shortage and payroll tax is effectively a tax on jobs. We must be doing everything possible to see businesses excel and the gaps in critical industries filled to make our economy boom,” Mr Speirs said.

“We know small businesses are struggling with increasing costs and rising inflation – payroll tax has a direct impact on a business’s profitability, particularly for those operating with relatively low margins or under financial pressure.

“Let’s support small businesses with a higher threshold for payroll tax so they can take on more apprentices, more trainees, and help boost the state’s industrial army as we move closer to AUKUS which promises thousands of local jobs.”

Shadow Minister for Finance and Tax Reform, Heidi Girolamo, said payroll tax can influence a business's decision to employ new staff.

“We know an Australian Chamber of Commerce and Industry survey found that 75 per cent of businesses suggested a payroll tax made it difficult for young people to enter the job market,” Ms Girolamo said.

“That’s why there must be payroll tax exemptions for apprentices and trainees.

“We need to keep the wheels spinning in South Australia to ensure our skills needs are met. To do this, businesses must have freedom and security – through exemptions – to take on new apprentices and trainees to boost our capability.”

Shadow Treasurer, Matt Cowdrey, said an increase to the payroll tax threshold would be huge for small businesses.

“This initiative will go a long way to support small businesses who have found themselves in the territory of payroll tax for the first time,” Mr Cowdrey said.

“It will also ensure South Australia has the most competitive threshold in Australia when it comes to payroll tax, making our state more appealing to would-be business owners and operators.

“If we provide the right environment and incentives, South Australia can truly lead the way in business development and job creation.”