What does the 2021-22 Tasmanian State Budget mean for you and your business?
On 26 August 2021, the Tasmanian Premier and Treasurer, the Honourable Peter Gutwein MP, delivered the Tasmanian Budget for 2021-22.
Similar to most of the mainland states, the Tasmanian economy is showing signs of rebounding from its recent pandemic-related recession. However, the Tasmanian economy will remain in deficit until at least 2023-24, when a modest budget surplus of $40 million is predicted.
From an economic perspective, the headline messages are:
- Economic growth in 2021-22 is predicted to be 4%, well above the 2% growth experienced in 2020-21;
- This year’s net deficit is expected to be $689.8 million, followed by an expected $86.4 million deficit in 2022-23;
- Net debt for 2021-22 is expected to be $1.7 billion, rising to $3.48 billion by 2024-25;
- The unemployment rate is currently 4.5% (which is below the national average), though this is expected to rise to 5.5% across the forward estimates; and
- The establishment of a $300 million fund to cover unforeseen expenses caused by COVID.
As expected, health remains the largest component of the state's expenses, at 32 per cent of the Budget. Across the four-year forward estimates, the health sector will receive $10.7 billion. This includes $196.4 million towards delivering additional elective surgeries and a further $198 million to meet increasing demand pressure in the state's hospitals.
From an education and training perspective, the Budget includes more than $135 million for skills and training, with the centrepiece being a $98.6 million four-year plan to evolve TasTAFE.
The Budget recognises that 97% of the State’s businesses are small businesses by including a suite of small business focussed initiatives, including:
- $2 million for a new Small Business Incubator and Accelerator pilot program;
- $800,000 over four years to Business Tasmania to help better support businesses by resolving problems and reducing barriers;
- $300,000 over three years for Regional Chambers of Commerce, to support their small business members;
- $150,000 for the Tasmanian Small Business Council to advocate and support its members; and
- $120,000 for an expanded Tasmanian Survey of Business Expectations, providing data to help inform decision-making as we continue our economic recovery.
The Tasmanian Government has taken the opportunity to implement a number of tax measures, mostly focused on land tax:
- resetting the land tax thresholds to increase the tax-free threshold for land tax from $24,999 to $49,999;
- increasing the start of the middle land tax band threshold to $50,000 and increasing the top tax band threshold from $350,000 to $400,000. These adjustments to the land tax thresholds are expected to result in 4,000 taxpayers no longer being liable for land tax and more than 70,000 taxpayers having a lower land tax liability;
- allowing the Commissioner of State Revenue to accept payment of land tax in three instalments where the amount of land tax payable in any financial year exceeds $500 (previously $1,000);
- reducing the premium component of the interest rate charged on unpaid tax from 8% to 4%;
- increasing the value threshold for the First Home Buyer Duty Concession and Pensioner Duty Concession from $400,000 to $500,000; and
- providing a two-year waiver of duty on the purchase of new and secondhand electric and hydrogen fuel cell vehicles to incentivise the uptake of these vehicles by reducing up-front costs by $2,000 on average.
The Budget papers note the introduction of a Foreign Investor Land Tax Surcharge on residential properties to come into effect next year, though no further details on the exact start date or the surcharge rate are provided. In addition, the Government has commenced a process to consider options for capping land tax from 2022-23 onward due to the growth in prices of Tasmania’s property market.
Overall, the Tasmanian State Budget continues the trend of state budgets which have focussed on health, education and the response to COVID, whilst only making incremental adjustments to the state taxation system.
For more information
Please contact your local RSM adviser to discuss the implications of this budget for you.