How does the 2022-23 Queensland State Budget affect your business?

Tax Insights

The COVID-19 pandemic significantly impacted Queensland’s revenues over the past two years. 

The key message from the Queensland Treasurer is that the emergency pandemic settings are over and the key priorities now are restoring the budget position, cost of living relief and jobs growth:The key message from the Queensland Treasurer is that the emergency pandemic settings are over and the key priorities now are restoring the budget position, cost of living relief and jobs growth.

  • The Queensland economy is forecasted to grow by 3% in 2021-22.  Growth in the remaining forward estimates period is expected to be 2.75%;
  • Net debt in 2021-22 is expected to reach $27bn by 2023-24, before peaking at $39bn in 2024-25;
  • Unemployment fell to an historically low 4.5% during 2021-22 and is expected to fall further to around 4% across the next four years, significantly below the 7% rate experienced in 2020-21;
  • Net interstate migration to Queensland during the 12 months to the end of September 2021 was 40,000 and this momentum is expected to continue across the forward estimate period; and
  • The Treasurer is now predicting a $1.91 billion surplus, a huge turnaround from the $3.48 billion deficit forecast last year.  The two significant contributing factors have been:
    • The $5.7 billion increase in royalties due to the unprecedented surge in coal and oil prices; and
    • The $2.1 billion increase in taxation revenue, mostly off the back of additional stamp duty collected on residential property transactions.

Significant tax changes

The Queensland Budget has announced a range of significant tax-related measures that will impact businesses, both large and small.

The headline news is that Queensland will add three new tiers to its current progressive coal royalty rates, which is expected to generate $1.2 billion in additional revenue over the forward estimates. 

Whereas the current top royalty rate is 15% (for prices exceeding $150 per tonne), the new tiers which will apply on or after 1 July 2022 are:The key message from the Queensland Treasurer is that the emergency pandemic settings are over and the key priorities now are restoring the budget position, cost of living relief and jobs growth.

  • 20% for prices exceeding $175 per tonne;
  • 30% for prices exceeding $225 per tonne; and
  • 40% for prices exceeding $300 per tonne.

To fund the Government’s investment and enhancements in mental health initiatives, a “mental health levy” (similar to that recently imposed in Victoria) will be applied to payroll tax liabilities arising on or after 1 January 2023. 

This levy is expected to raise $425 million by 2025-26 and will apply to larger employers with annual Australian taxable wages of over $10 million.  The mental health levy will be applied as follows:

  • A 0.25 percent levy on the annual Australian taxable wages of employers, or groups of employers, above $10 million; and
  • An additional 0.5 percent levy on the annual Australian taxable wages of employers, or groups of employers, above $100 million.

In terms of tax relief, the Government will be adjusting the existing payroll tax deduction framework from 1 January 2023. 

Currently, employers can claim a partial payroll tax deduction until their annual Australian taxable wages reaches $6.5 million, reflecting a phase-out rate $1 for every $4 of taxable wages above the $1.3 million threshold.  This phase out rate will be increased to $1 for every $7 of taxable wages above the $1.3 million such that an employer will be entitled to a deduction until their annual Australian taxable wages reaches $10.4 million. 

The following table provides the indicative tax savings as a result of this measure:

Annual Taxable Wages ($) Tax Saving ($)
2,000,000 3,563
4,000,000 13,741
6,000,000 23,920
6,500,000 26,464
8,000,000 16,971
10,000,000 2,829

 

The 50 percent payroll tax rebate for wages paid to apprentices and trainees will be extended for 12 months until 30 June 2023. In addition to apprentice and trainee wages generally being exempt from payroll tax, this rebate will provide additional support to employment in the ongoing recovery from COVID-19, in particular supporting youth employment and businesses who employ trainees and apprentices.

To ensure ongoing sustainable funding of Queensland’s racing industry, the Government has announced a new funding model.  Key elements of the reform are:

  • Applying a 5 percent racing levy additional to the betting tax, which is expected to raise an additional $80 million per annum;
  • Taxing bonus bets or free bets to bring Queensland into line with other jurisdictions, other than Tasmania; and
  • Hypothecating 80 percent of total betting tax revenue to Racing Queensland, up from the current 35 percent.

Retirement visa holders will be exempt from additional foreign acquirer duty for purchases of their principal place of residence on or after 1 January 2023.  This change will ensure that, subject to conditions, holders of retirement visas who purchase a home will not be subject to a surcharge rate of duty and only duty at standard concessional rates will apply to eligible transactions.

Once again, and in contrast to the significant announcements made in the New South Wales budget, there are no changes to the base or rate of stamp duty. 

This leaves Queensland with one of the highest rates of duty and, arguably, the broadest base.


Non-tax measures

Outside of tax, there are significant, new infrastructure spending measures ranging from health, rail and public transport, hospitals and other public infrastructure:This leaves Queensland with one of the highest rates of duty and, arguably, the broadest base.

  • A $59.126 billion infrastructure investment program over the four years to 2025–26 to enhance the state’s productive capacity, improve service delivery and sustain over 48,000 jobs across all regions of the state;
  • Approximately $9.8 billion in capital expenditure to deliver around 2,200 additional hospital beds over the next six years, as well as $1.645 billion over five years for mental health services.  The additional mental health services are partly funded by the mental health levy imposed on larger employers;
  • Nearly $400 million for new primary schools in the south-east Queensland region; and
  • A total of $385 million to support Queensland households with a $175 cost of living rebate in 2022-23, in conjunction with existing electricity rebates worth over $1.1 billion.

Overall, the Queensland State Budget continues the recent focus on infrastructure and health and making minimal wholesale changes to the tax and transfer system.


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