Need for NSW Payroll Taxes to be changed

It goes without saying that taxes should always be fair. And most would argue that NSW Payroll Taxes are unfair and is a real disincentive to increasing employment.

It should be noted that the NSW Government received $8.5 billion in revenue for FY2019/2020 and is on track to receive $15.4 billion by FY2027/2028 due to NSW Payroll Taxes.

Once above the official payroll threshold, a 5.45% tax is imposed on all NSW-based businesses, including eligible early childhood education and care services.

Ironically, the NSW Payroll Tax amount that must be paid to the NSW Government can be at least the remuneration plus superannuation of one (or more) early childhood educator(s).

And those who pay NSW Payroll Taxes can often find themselves "competing" against other NSW ECEC services who are guaranteed never to pay NSW Payroll Taxes.

Moreover, in light of the Federal Government's Worker Retention Payments, a number of ECEC services will be paying 5.45% NSW Payroll Taxes for the first time while having an imposed 4.4% limit on fees (so that such services can pay their early childhood educators and teachers 10%-15% more).

The ACA NSW submission has asked the NSW Government to consider fairer and lower Payroll Taxes for ECEC services. The submission proposes solutions including rebates to counter the effect of the payroll tax implications of the Worker Retention Payments, grants to achieve greater fee afforability for parents, and discounts on Payroll Taxes.

NOTE: ACA NSW thanked the previous NSW Government for raising the threshold before businesses had to pay NSW Payroll Taxes. That meant that up to 900 NSW-based ECEC services were no longer subject to NSW Payroll Taxes.

For any further information/clarification, please contact the ACA NSW team on 1300 556 330 or nsw@childcarealliance.org.au.

PUBLISHED: 5 FEBRUARY 2025