The state government, which has decided to implement all 12 recommendations of the NSW Productivity Commission, said small businesses with a payroll tax liability under $20,000 will have the option of paying their taxes once a year from July 2019.

Currently, all businesses are required to file monthly returns and make monthly payments.

Businesses with tax liabilities under $150,000 have also been given the option of filing one annual return and making pre-set monthly installment payments, based on their previous year’s liability.

The NSW government believes that these two steps will help businesses save about $10 million per year and an average of about 16 hours work each year by 2020-21.

Western NSW Business Chamber regional manager Vicki Seccombe said the change was a step in the right direction for reducing red tape for businesses and their associated administration costs.

But, she warned, it definitely would not help all businesses.

“Payroll tax is a tax on jobs and job creation, it serves as a disincentive to employ more people,” Ms Seccombe said. 

“The chamber has been advocating for changes to this tax and the payroll tax threshold should be lifted, so we were pleased in June this year to see changes announced that included the payroll tax threshold lift to $850,000 in the first year, and then by $50,000 per year for the next three years.”

NSW treasurer Dominic Perrottet said the time and resources taken up to calculate and pay payroll tax are itself a tax on productivity. 

“We are reducing the costs and making compliance easier giving businesses more time and money that can be reinvested back into their business and the people working in them,” Mr Perrottet said.