Local Business Action Plan Payroll tax

Nationals back local small business with payroll tax plan

30 April 2021

Jobs will be the centrepiece of the Victorian Nationals and Liberals’ announcement of the biggest reform to payroll tax in a generation.  

The Nationals have released their Local Business Action Plan which will see around 15,000 Victorian small businesses removed from the payroll tax system – a system which is a tax on jobs. 

Small businesses across the Euroa electorate are paying too much tax – and the bigger they grow, the more Victorians they employ, the more they pay. The Local Business Action Plan means a saving of up to $43,650 each year on payroll tax for small business.

Ms Ryan said under the plan The Nationals in government would increase the threshold at which a business is liable to pay payroll tax to $1.6 million.

The current payroll tax threshold in Victoria ($650,000, scheduled to increase to $700,000 in 2022-23) is the worst of any Australian state or territory. Our reform will make Victoria the most competitive state for small business payroll tax.

The Nationals’ payroll tax reform plan ensures:

  1. Businesses won’t pay a cent of payroll tax until their wages bill is greater than $1.6 million
    This takes approximately 15,000 businesses out of the payroll tax system entirely.

  2. No business will pay the full rate (4.85%) of payroll tax until their wages bill reaches $2 million
    Payroll tax would be phased in gradually between $1.6 million and $2 million – ensuring no business is hit with a sudden tax hike as they employ more Victorians.

  3. All businesses, regardless of their total wages bill, subtract $800,000 from their assessable payroll when determining tax liability
    All Victorian businesses will have certainty that under The Nationals in government with the Liberals, they will pay less payroll tax. 

Under Labor*

Under the Liberal Nationals


Payroll of $800,000




Payroll of $1.6 million




Payroll of $2.5 million




* baseline of $700,000 payroll tax threshold as scheduled under Labor policy from 2022-23  

While the Andrews Labor Government has no plan for small business recovery, the Victorian Nationals and Liberals will remove tax, reduce fees and rally behind small business.

Comments attributable to Member for Euroa and Deputy Leader of The Nationals Steph Ryan:  

“As we emerge from the health crisis caused by COVID-19, our state faces the worst economic crisis in our lifetime. 

“Our local small businesses are fundamental to keeping our region strong and supporting our local economy. They hate payroll tax as it’s a tax and handbrake on employing people. 

“I will continue to fight for small businesses across the Euroa electorate and will be relentless in creating the most attractive state in our country for small business to start up, grow and employ Victorians.”

Comments attributable to the Leader of the Opposition and Shadow Minister for Small Business, Michael O’Brien:

“Payroll tax is a tax on jobs, and the Liberals and Nationals will cut this tax to create more Victorian jobs.

“Under Labor, Victoria has the worst small business payroll tax in the country. The Liberal Nationals will turn this around and make this state the best place to start and grow a small business.

“An O’Brien Liberal Nationals government will unashamedly be a government for small business jobs. While Labor focuses on unions and the big end of town, we will continue to bat for small business and the millions of jobs the sector creates. 

“Small businesses are proud of their independence. They are the jobs engine room of our economy and employ more Australians than big business.

“Only an O’Brien Liberal Nationals government will slash payroll tax for small business to create more jobs to get Victorians back to work.”

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