The tax plight on Aus­tralian em­ploy­ers

UHY, the in­ter­na­tional ac­count­ing and con­sul­tancy net­work, has found that Aus­tralia risks los­ing its com­pet­i­tive ad­van­tage in the Asian re­gion if em­ploy­ment taxes (or on-costs) are not kept in check.

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The UHY con­ducted a global study in which it ex­am­ined data from 29 coun­tries across its in­ter­na­tional net­work, cal­cu­lat­ing the value of com­pul­sory pay­ments busi­ness makes on top of wages. These on-costs to em­ploy­ers in Aus­tralia in­clude state-based pay­roll taxes, su­per­an­nu­a­tion and work­ers com­pen­sa­tion pre­mi­ums.

UHY Haines Nor­ton (Aus­tralia) Chair­man, Michael Coughtrey said the study high­lighted global dif­fer­ences as well as those within our own re­gion, cit­ing em­ploy­ers in New Zealand now pay­ing US$1,341 (4.5% of gross salary) com­pared to US$4,485 (15% of gross salary) in Aus­tralia on a com­par­a­tive em­ployee salary.

Mr Coughtrey said global com­pa­nies will al­ways choose to lo­cate re­gional busi­ness cen­tres where the cost of do­ing busi­ness is most at­trac­tive.

“High em­ploy­ment costs to busi­ness, in­clud­ing on-costs like pay­roll taxes, put job creation, and global com­pet­i­tive­ness at risk.

“While em­ploy­ers in New Zealand are only re­quired to pay 3% to su­per­an­nu­a­tion com­pared to our 9.5%, they are still very com­pet­i­tive as they have no pay­roll taxes, no cap­i­tal gains taxes and lower com­pany tax rates – all largely funded by a broad-based GST at 15%. By com­par­i­son, Aus­tralian busi­nesses are pay­ing more than triple in ad­di­tional wage on-costs per em­ployee.”

Ac­cord­ing to UHY G7 na­tions – no­tably Canada, the US and the UK – have com­par­a­tively low em­ploy­ment on-costs (rang­ing from 7-9% for low earn­ers) while France and Italy’s costs re­main high (at 43% and 39% re­spec­tively). This is de­spite Italy see­ing one of the big­gest falls of more than 25% since 2012.

Mr Coughtrey said any tax re­forms put on the ta­ble in the lead up to the next Fed­eral elec­tion need to take into ac­count ex­ist­ing pres­sures on em­ploy­ers.

“The govern­ment must weigh up manda­tory em­ploy­ment costs against the eco­nomic ben­e­fits they hope to achieve.”

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