Payroll Tax Rebate Scheme
If you are a NSW business owner, you may be eligible for a payroll tax rebate.
Businesses that create and fill new jobs on or after 31 July 2016 will receive payroll rebates worth A$6,000. New jobs commencing on or after 31 July 2016 will receive a rebate of up to $2,000 payable on the first anniversary and up to $4,000 on the second anniversary.
To be eligible, your business must be registered as an employer and paying payroll tax. Eligible businesses that increase the number of NSW FTE employees, will receive a payroll tax rebate following the employment of each additional NSW employee in a position that is a new job.
A position is a new job if the employment of a person in that position results in a sustained increase in the employer’s NSW FTE employees.
New jobs commencing on or after 31 July 2016, will only be eligible for the rebate if the employers full-time equivalent (FTE) employee number, prior to the new job, is at or below 50. This increase must be sustained on both the first and second anniversaries of the date the employment commenced. However, if employment is only maintained for the first year then the rebate will only be paid for that year.
Please note: a registration for a new job must be made within 90 days of the job commencement date or it will not be eligible for the rebate.
If you have questions on any of the above issues raised, please do not hesitate to contact us.
Kim Edwards
Chartered Tax Adviser
Chartered Accountant
T: 02 9984 7774
E: kime@northadvisory.com.au
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
General consultancy fees for reviewing the investor’s finances are not deductible against rental income.
If the primary purpose of the fees is to restructure debt or assess overall financial position — rather than manage, maintain, or improve a specific rental property — the deduction will likely be rejected.
The nature and purpose of the expense determine deductibility, not just any connection to property ownership.
Tax law distinguishes between expenses “wholly and exclusively” incurred in producing assessable income and those of a private or capital nature.
Such disallowed consultancy fees cannot be used to increase the cost base for CGT when selling the property.
Because they don’t meet the statutory cost-base criteria, these costs won’t reduce future capital gains.
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Frequently Asked Questions
What was the scenario that led to this ruling on consultancy fees?
Two taxpayers with a portfolio of investment properties engaged a consulting firm to reassess their overall financial position — including debts and asset values — and help with creditor negotiations. The consultancy charges were claimed as expenses against rental income. The tax authority ruled those fees were not deductible.
Why did the ATO / tax authority refuse to allow the consultancy fees as deductions?
Because the consultancy work related to the taxpayers’ broader financial affairs — not the income-producing operations of the rental properties. The fees were deemed private in nature, not directly incurred in producing rental income.
Could those consultancy fees at least be added to the cost base of the properties for Capital Gains Tax (CGT) purposes?
No. The ruling found the fees did not meet the criteria under the cost-base provisions (s 110-25 of ITAA 1997) — they were not directly connected to acquisition, improvement or necessary preservation of the properties themselves.
What kinds of property-related expenses are typically deductible for rental property owners?
Generally, expenses incurred in earning rental income — such as interest on loans for the rental, property management or letting agent fees, maintenance and repairs, insurance, council rates, land tax, and ongoing legitimate costs directly tied to the rental — can be deductible.
What warning or lesson does this ruling give to property investors who pay for consulting or financial advice?
That not all property-related costs are deductible. Payments for general financial advice or strategic review of your investment portfolio may be viewed as private or capital-in-nature — and may be disallowed for both income and CGT expense claims. Always assess whether the service relates directly to producing rental income before claiming.
What is the Payroll Tax Rebate Scheme and how can I qualify for it?
If my business is in NSW and pays payroll tax, I might be eligible for a payroll tax rebate when I create and fill new jobs. The scheme provides:
- Up to $2,000 per eligible new job after the first year of sustained employment
- Up to $4,000 per eligible new job after the second year, for roles created on or after 31 July 2016
To qualify, my business must be registered as an employer and paying payroll tax, and the increase in full-time equivalent (FTE) employees must be sustained over the required period. I also must register each new job within 90 days of the employee starting to be eligible for the rebate.
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