NSW Treasurer Dominic Perrottet has delivered the first budget since the Berejiklian government was re-elected, locking in the new $900,000 payroll tax threshold for 2019–2020.
The threshold change was previously announced in the 2018–19 budget, and is set to increase in $50,000 increments until it reaches $1 million by 2021–22.
Mr Perrottet expects the latest threshold increase will save NSW businesses $187 million and further threshold increases over the next two years will provide savings of $571 million.
Payroll tax is the state’s largest source of taxation revenue, with revenue in 2018–19 expected to be $9.4 billion.
$9.8 billion in payroll tax revenue is forecast for 2019–20, growing by 4.5 per cent from 2018–19, with revenue over the four years to 2022–23 forecast to grow at an average annual rate of 4.6 per cent, reflecting increases in the tax-free threshold, which reduces the growth in payroll tax revenue.
Further, from 1 July 2019, transfer duty thresholds will be indexed to the Sydney Consumer Price Index.
This will gradually increase thresholds and over time reduce the amount of transfer duty paid on property purchases.
With the exception of the 2004 introduction of additional duty on residential properties valued over $3 million, transfer duty brackets had not changed since 1986.
A surplus of $802 million is projected for 2018–19, down from the original $1.4 billion, as the state grapples with a housing market downturn and slower economic growth.