About 3600 South Australian businesses will benefit from payroll tax changes which are on their way through state parliament, Member for Hammond Adrian Pederick says.
Businesses which pay between $600,000 and $1.5 million in wages – the equivalent of about 10-25 employees on a median wage – will no longer pay payroll tax from January 1 if the changes become law.
Those which pay between $1.5 million and $1.7 million would benefit from a reduced tax rate.
In Parliament last week, Mr Pederick said the proposal was about encouraging owners to invest more in their businesses.
"You cannot just keep taxing people because you think it is an easy way to make money," he said.
"We are here to assist the engine room of the South Australian economy, the many tens and tens of thousands of small businesses, people who are prepared to put their homes and all their asserts on the line to start a small business.
"These changes will remove a major disincentive to businesses, creating jobs, employing more people as well as making South Australia a much more attractive place to invest in and grow a business."
The measure would cost taxpayers $44 million per year in lost revenue, but would save some businesses up to $44,550 per year.
South Australian businesses would also enjoy the second-highest payroll tax-free threshold in the nation, after the Australian Capital Territory.
The proposal was welcomed by business owners including IGA Fresh Westside's Josh Maczkowiack when the Liberal Party announced it during the state election campaign earlier this year.