Victoria's Budget leans on indirect taxes, offers little relief for business

The Victorian Government’s 2026/27 State Budget has delivered what might be an optimistic approach to budget stabilisation, with a continued reliance on indirect taxes and targeted adjustments that are unlikely to do much to boost the confidence of businesses operating in the state, according to BDO.

BDO Indirect Tax Partner, Michelle Bennett said the Budget reflects the ongoing challenge of balancing fiscal sustainability with cost-of-living pressures and business confidence remains uneven.

“While there are no significant changes to indirect taxes, the cumulative impact of existing settings and incremental adjustments should not be underestimated, and the lack of relief is likely to disappoint business and property investors.”

Michelle said taxes such as land tax, payroll tax and other indirect measures continue to play a central role in the state’s revenue strategy, with businesses likely to continue to feel the effects over time as thresholds, rates and compliance expectations bite in a tough, inflationary economy.

“Indirect taxes are often less visible than headline measures, but they can have a material impact on cash flow and operational decision making” she said.

“For many organisations, particularly those with large property holdings or significant workforces, even modest changes can translate into meaningful cost increases and in the absence of real innovation, this means increased prices or including through offshoring staff or relocating entire operations.”

BDO People Advisory Partner, Stefanie Merlino said the Budget also reinforces a broader trend of increased scrutiny and compliance activity, warning that businesses should be prepared for greater oversight from revenue authorities.

“We are seeing a more data-driven approach to compliance, and that is only expected to intensify,” Stefanie said.

“Businesses need to ensure their systems, processes and governance frameworks are robust enough to withstand that level of scrutiny.”

Stefanie said the lack of relief in the indirect tax landscape underscores the importance of proactive planning, particularly for businesses considering expansion or restructuring.

“Now is the time for organisations to review their indirect tax positions in detail,” she said.

“Understanding how these measures interact and anticipating future changes will be critical to managing risk and identifying opportunities in what remains a challenging economic environment.”
 

---

For media enquiries:

Tate Papworth 
Manager, Media 
E: Tate.Papworth@bdo.com.au 
Ph: 0433411189