Treasurer Ben Wyatt delivered the Western Australian State Budget on 9 October 2020, the first of the State and Territory budgets of 2020. This Budget focusses on the WA Recovery Plan which is said to be a comprehensive strategy and $5.5b investment to promoting jobs and the opportunity to reskill.

The WA economy is expected to grow by 1.25% in 2020-21 and is promoted as being likely to rebound faster and stronger than its neighbours. This has been supported by a general government operating surplus of $1.2b (forecast for 2020-21). However, there has been no perceivable shift in Premier McGowan’s stance on the hard border closure which is not great news for tourism operators relying on interstate travelers, and continues to hinder the expansion of the WA workforce.

Business and tax reform was also off the table, with the Treasurer stating that reform should come during good times, not bad. It mentioned a number of support measures already in place to support businesses recover from the COVID crisis, which we have outlined below.

All in all, we expect the WA Government finds themselves in a strong position in the lead up to the State election in March 2021.

Key investments

  • $27b for major infrastructure including
    • $2.39b in major roads infrastructure and maintenance funding
    • $5.7b in METRONET projects across WA
  • $1b for WA household relief including
    • A one-off $600 credit for power bills from 1 November 2020.
    • The average WA household can expect a 10% reduction on household fees and charges in 2020-21.
  • $306m increase to mental health funding, bringing the total spend to $1b a year.
  • $314m to recruit 800 more police officers over the next 4 years.

Revenue

On the revenue side, very little has changed other than extending the off-the-plan transfer duty rebate. On one hand this is not too surprising given the most significant changes to the duties regime since the Rewrite were made in 2019. However, it is still worth noting that there is no mention of Western Australia abolishing duty on non-land business assets which it originally agreed to abolish due to the introduction of GST. Western Australia, Northern Territory and Queensland remain the only jurisdictions to continue to impose this tax.

The Budget also set out the revenue relief packages that have been provided due to COVID-19. We briefly summarise those measures and the off-the-plan transfer duty rebate below.

Payroll Tax

The Budget highlighted a range of payroll tax measures which the State Government has already introduced to support small businesses and non-government organisations during the COVID-19 pandemic which were estimated to assist at least 11,000 businesses. These include:

  • Raising the payroll tax exemption threshold from $950,000 to $1m from 1 July 2020 in order to provide continuing support to small and medium sized business in light of COVID-19. The increase was originally slated to occur on 1 January 2021. As a result of this measure, approximately 300 businesses will not be required to pay payroll tax and a further 11,000 businesses’ payroll tax liability will be reduced. This follows the increase to the exemption threshold from $850,000 to $950,000 on 1 January 2020.
  • Waiving payroll tax for the four months between 1 March and 30 June 2020, resulting in approximately 11,000 businesses not being liable for payroll tax. The waiver was available to small to medium-sized businesses with Australia-wide annual wages of less than $7.5m during the 2019-20 year.
  • Providing one-off payroll tax grants of $17,500 to eligible small to medium-sized businesses.
  • Continuing the payroll tax exemption applies to JobKeeper payments, ensuring employers are not liable for payroll tax on these payments which would have otherwise attracted payroll tax.

Transfer Duty

The off-the-plan transfer duty rebate, originally introduced on 23 October 2019, has been temporarily extended to 31 December 2020 in order to cover purchases in multi-tiered developments already under construction where the contract was entered into between 4 June 2020 and 31 December 2020. The rebate is available to owner-occupiers and investors who enter into a pre-construction contract between 23 October 2019 and 23 October 2021 to purchase a new residential unit or apartment in a multi-tiered strata development. The scheme provides a transfer duty rebate of 75% of duty paid, capped at $50,000 for pre-construction contracts and $25,000 for contracts under which construction has already commenced. It is intended to promote investment and stimulate jobs in the construction industry.

Land Tax

The Land Tax Assistance for Landlords program, announced on 23 April 2020, offers land tax grants to commercial landlords who provide rent relief for a minimum of three months and freeze outgoings to small businesses that have suffered at least a 30% reduction in turnover due to COVID-19. Under this scheme, landlords receive grants equating to 25% of their land tax bill for the 2019-20 year for the property in which an eligible tenant is provided relief.