Victoria is a powerhouse of business, home to a diverse and innovative economy. But recent reports paint a more challenging picture for business owners in the state, particularly those trying to manage increasing tax liabilities and compliance burdens.
If you’re a business owner in Victoria, you may be feeling the pressure: costs are up, red tape is tightening, and strategic decisions are harder to make with clarity. So what’s driving this shift – and what can be done about it?
Why Is Victoria Ranking So Poorly for Business?
Several independent reports released over the past two years have delivered a consistent message: Victoria is currently the most challenging state in Australia in which to do business.
- The Business Council of Australia’s 2024 “Regulation Rumble” report ranked Victoria dead last (8th place) among the states, citing high property taxes, escalating payroll taxes, and complex business licensing requirements as major roadblocks to productivity.
- A National Australia Bank survey, conducted for the Victorian Department of Treasury and Finance and released publicly by the state opposition, found Victoria to have the highest regulatory burden in the country.
- The Victorian Chamber of Commerce and Industry’s 2022 report similarly confirmed that the current cost and compliance burden is “adversely impacting businesses across the state.”
This alignment across multiple sources suggests it’s not just sentiment – it’s structural.
What’s Driving the Rising Costs?
Some of the most common financial and administrative stress points we see among our business clients in Victoria include:
- Payroll Tax Thresholds: Despite minor relief measures in recent budgets, the tax continues to hit small and medium-sized businesses hard – particularly those with modest growth in employee numbers or salaries.
- Land Tax and Property-Related Levies: Commercial and investment property owners face mounting costs, with Victoria leading the nation in state-based property taxation.
- Licensing and Sector Regulation: From hospitality to health services to construction, state-based licensing regimes have become more fragmented and time-consuming, often requiring third-party consultants to navigate.
- Reporting Complexity: Layered obligations – federal, state, local – are placing added pressure on internal teams, or forcing businesses to increase reliance on external advisers.
What Can Victorian Businesses Do?
While policy change is slow, action at the business level doesn’t need to be. Here are four key strategies businesses can take to manage the impact of rising tax and compliance costs:
1. Revisit Your Business Structure
Optimising your structure – whether it’s company, trust, partnership or hybrid – can have meaningful tax implications. Regular reviews ensure you’re not overpaying in areas like payroll tax or fringe benefits, or missing out on entitlements like small business concessions.
2. Review Your Employment Model
With payroll tax creeping into more businesses, reviewing how you engage staff (employees vs contractors), how bonuses are structured, and where your workforce is located may reveal strategic opportunities for savings.
3. Improve Financial Forecasting
It’s no longer enough to “set and forget” your financial plan. Scenario modelling (especially using real-time data) can help anticipate tax liabilities, optimise cash flow, and plan capital investment without surprises.
4. Outsource Compliance Strategically
Rather than reacting to each new change, many business owners are partnering with specialist advisers who provide proactive tax planning, regulatory guidance, and integrated financial oversight. This doesn’t just free up time – it often reveals savings.
A Time for Focused Support
The reality is that Victoria’s tax and compliance pressures aren’t easing any time soon. But within this environment, savvy business owners are not sitting still – they’re adjusting, seeking better advice, and proactively managing risk.
At TAG Financial Services, we work with business owners across industries to help strategically manage rising costs, plan for tax efficiently, and free up time and headspace to focus on growth. Whether you’re facing payroll tax creep, compliance overwhelm, or just want to sense-check your structure, we’re here to help.
Need a second opinion on your business structure or tax position?
Book in a complimentary meeting today.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2025. Please do not reproduce without the expressed written consent of the author.