To help reduce payroll tax and to create better transparency, the Victorian government will start a new standardised method of calculating the value of startup companies and their shares.
This new method will adopt a so-called “safe harbour” method that will allow startups to apply a pre-determined approach to calculate the value of their employee share schemes.
Aside from reduced payroll taxes, this change will also allow some startup businesses to avoid paying for a pricey full valuation assessment by a third party.
Some startups will also be eligible for a refund from the State Revenue Office depending on the company’s specific circumstance. For example, startups that have paid more payroll tax on their employee share scheme interests compared to the amount determined by this new method could be eligible for a refund.
The startup destination of the Asia-Pacific
Victorian Treasurer, Tim Pallas, believes that this initiative will encourage startup businesses to set up shop in the state. He adds that the safe harbour method will significantly increase jobs and add $4 billion to the Victorian economy.
The Victorian government also created the LaunchVic organisation that used $60 million to further support the local startup ecosystem.
Due to initiatives like these, Victoria has been successful in luring well-known startups from all over to build local offices in the state such as Stripe, Slack, and Zendesk.
Victorian Minister for Innovation and the Digital Economy, Philip Dalidakis, adds, “Changes like this make it easier for entrepreneurs, create more jobs, and reinforce why we have become the startup destination of the Asia-Pacific.”
This change in the calculation of share valuation comes after successive increases to the payroll tax-free threshold by the state government. For this year, the current annual threshold is at $650,000.
With all these incentives, the future looks very bright for startup businesses in Victoria.
If you need assistance with your payroll tax compliance, contact a Chan & Naylor accountant near you, and we’ll be more than happy to help.
Aside from payroll taxes, have a look at our other accounting and advisory services that we do to help you achieve greater success.
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