More private schools to be hit with payroll tax after government backflip

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The state government has been forced to backflip again on its new payroll tax policy after it was revealed private schools that breached the threshold for inclusion would not have to pay until 2029.

After pressure from the sector that the operation of the policy was arbitrary and unfair, Education Minister Natalie Hutchins said on Tuesday while the income threshold of $15,000 per student would remain in place, schools would be assessed annually on their inclusion on the list.

Education Minister Natalie Hutchins.Credit: Darrian Traynor

“The threshold has been set at $15,000 and will remain in place until at least January 1, 2029, when it will be reviewed,” Hutchins said.

“Using the annual data provided to the Australian Curriculum, Assessment and Reporting Authority (ACARA), non-government schools will be assessed on an annual basis against the threshold, and if a school’s total income per student exceeds the threshold the school will become subject to payroll tax.

“If a school’s total income per student falls below the threshold, the school will no longer be subject to payroll tax.”

Any new non-government schools opening between now and 2029 were already set to be assessed against the threshold and that remains in place.

The advisory came after The Age revealed schools were already breaching the threshold for the payroll tax, but would not have to pay because they were left off the initial list released by the Andrews government of 60 schools to be hit with the tax.

The tax was originally planned to contribute $420 million towards covering the state’s COVID debts, but will reap $100 million less after the government lifted the threshold from $7500 to $15,000.

Independent Schools Victoria chief executive Michelle Green said schools were struggling with the tax’s arbitrary nature and the “extraordinary discretion the education minister has, to pick and choose who pays and who doesn’t”.

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