On 7 September 2020, the Queensland Government released its COVID-19 Fiscal and Economic Review, providing an update on Queensland’s economic and fiscal estimates over 2019-2020 and 2020-2021, which incorporate the impacts of the COVID-19 pandemic to date.
While the report outlines the Queensland Government’s economic strategy, it builds on the Unite and Recover: Queensland Economic Recovery Plan, highlighting more than $7 billion committed to supporting jobs and the Queensland economy.
There were no surprising announcements except the small business restructure transfer duty abolition, however the finer details remain to be seen.
Small business restructure transfer duty abolition
The Treasurer announced transfer duty will be abolished for small business restructures. Further details regarding the extent of this measure are yet to be announced.
BDO Comment: Queensland’s duty base is broader than its southern counterparts, and the State still imposes transfer duty on most business sales. Existing laws currently provide for limited transfer duty exemptions for business restructures, especially involving non-corporate entities. BDO anticipates the new measures will only apply to businesses under specified monetary thresholds (e.g. through means-testing or business valuation limits). These measures may provide further opportunities for businesses to restructure free from transfer duty costs.
Backing Queensland Business Investment Fund
Similar to the Victorian scheme, the Treasurer has announced $500M will be invested into the Backing Queensland Business Investment Fund. The fund is intended to target investments in Queensland businesses to create Queensland-based jobs.
BDO Comment: The Backing Queensland Business Investment Fund appears to be additional funding to support Queensland businesses in addition to the COVID-19 Jobs Support Loans. If structured similarly to the Victorian Business Growth Fund, it is expected there will be turnover and asset testing requirements to be eligible. BDO expects the eligibility criteria to be released, and expressions of interest to open, in the near future.
Extension of COVID-19 related payroll tax and land tax relief measures
The Queensland Government has committed to extending selected COVID-19 relief measures into the 2020-2021 financial year. These measures largely mirror the existing relief provided for the 2019-2020 financial year. Extended relief includes:
- A 2-month payroll tax refund for July and August 2020 for employers paying Australia-wide taxable wages of up to $6.5M
- Continued exemption of JobKeeper payments from payroll tax
- Extension of the 25% land tax rebate to the 2020-2021 financial year for landlords providing residential relief
- Extension of existing rental relief offered to business renting State Government premises until the end of 2020.
BDO comment: BDO welcomes the extension of these relief measures, particularly in relation to the payroll tax and land tax relief. BDO expects the eligibility criteria and form of relief will be substantially similar to those announced earlier this year.
Increased debt recovery and compliance program
An additional $74.95 million will be invested in the Office of State Revenue’s debt recovery and compliance program. This will include increased audits and investigations for State taxation and royalties, as well as further proactive debt recovery action by the State Penalties Enforcement Register.
The new program is expected to increase collection and revenue by $488.15 million across the next three and a half years.
BDO comment: An increased focus on compliance and debt recovery is inevitable in light of the current economic environment. With this in mind, BDO urges the Office of State Revenue to adopt a cooperative approach with taxpayers when undertaking investigations and audits, particularly given increased financial pressures due to the COVID-19 pandemic. We are happy to assist any of our clients with State tax reviews as needed.
Prepare your business
Our advisers have developed a range of resources to assist you in safeguarding your business to keep it up and running. Visit our COVID-19 hub to learn more.