Victorian small businesses are paying a tax they wouldn’t have to pay if they were operating anywhere else in Australia. Victoria’s $650,000 payroll tax threshold is now the worst in the nation, after South Australia’s recent payroll tax cut.

Ahead of the Victorian State Election, the Victorian Chamber of Commerce and Industry is calling on the major parties to increase the tax-free threshold to $850,000. A bi-partisan commitment prior to the election would show that both major parties support small business.

“Despite the efforts of the Andrews Government, Victoria has fallen behind. If small businesses are to grow and create more job opportunities for Victorians, we need to increase the payroll tax threshold,” said Victorian Chamber Chief Executive Mark Stone AM.

Payroll tax is a tax on jobs, and Victoria is now the only place in Australia taxing small businesses once the combined wages of their staff reaches $650,000. All other States and Territories have higher thresholds of between $850,000 and $2 million.

Lifting the Victorian payroll threshold to $850,000 would open up more job opportunities for more Victorians.

“We care about keeping Victorian business competitive and ensuring young Victorians have job opportunities to build a strong future. Victoria’s payroll tax is making it harder for business to hire more people,” Mr Stone said.

Although the Andrews Government’s 2018/19 Budget delivered some payroll tax relief for regional businesses, more needs to be done to keep Victorian small businesses competitive and create more jobs.

“It doesn’t make sense to slap Victorian small businesses with a tax on jobs,” Mr Stone said.

Payroll tax relief is a key business priority and part of the Victorian Chamber’s 2018 State Election campaign Stronger Business, Stronger Victoria – a blueprint to grow business and create jobs.

Payroll Tax Rates and Thresholds

Threshold$650,000$850,000 ($1m in 2021)$1.1m$850,000$1.5m (from 1 Jan 19)$2m$1.5m$1.25m
Rate4.85% (Metro)


5.45%4.75%5.5%4.95%6.85%5.5%4% to 6.1%


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