NSW Businesses Struggle to Grow Due to High Payroll Taxes

Businesses in New South Wales are struggling to expand due to their higher payroll taxes compared to the national average, according to Business NSW. This is hindering their growth potential. As a result, they are facing challenges in increasing their profits and hiring more employees. The higher payroll tax obligations are putting a strain on their financial resources.

Business NSW says that employers in NSW pay $2688 per employee in payroll taxes, which is higher than the national average of $2463. Other regions in Australia are also suffering the same fate with their current tax systems. In Western Australia, employers are paying $3285 per employee, which is a 41 per cent increase from 2018-19. The same thing with Canberra employers who are also burdened with a payroll tax of $2808 per employee. 

Shade Australia, a seller of outdoor umbrellas and shade products, told The Australian that they are being careful about growing their team because of the upcoming payroll tax limit. With the threshold in NSW set at $1.2 million since 2020, Shade Australia also said they are hesitant to surpass this limit, fearing the significant financial burden it would impose. 

Made in Italy, a restaurant chain operating in Sydney for the past 23 years, also told The Australian that they had to scale back their growth plans due to economic uncertainties and tax burdens. Despite expanding from four to six restaurants, Made in Italy faced challenges after hitting the payroll tax threshold, leading to the closure of two locations to mitigate profit losses. 

“We’re not encouraging business growth, we’re not encouraging innovation, we’re not en­couraging start-ups,” Business NSW chief Daniel Hunter said. Australia is “losing out to other countries” when it comes to the tax system, he said. 

Outsourcing is an option that can help businesses grow, without the incurring the exorbitant tax liability. With outsourcing, Australian companies get access to a global workforce, with the same qualifications as their Australian counterpart and allows businesses to re-align their budget towards growing their business.