Every business owner should be aware of the Payroll Tax obligations for businesses, are you?

If you own a business with taxable Australian wages exceeding the threshold for your relevant state, then this could relate to you.

If your business overlooks this tax it can be a significant cost to your business, below are basic facts to see if this is relevant to you.

What is Payroll Tax?

Payroll tax is a state imposed tax on an employer’s taxable wages, there are thresholds to determine if this relates to you. Each state varies in thresholds and may be subject to change. Payroll tax is paid by the employer.

The calculation is self-assessed and is calculated on monthly total wages that are subject to the following:

- Gross wages
- Superannuation
- Bonuses and commissions
- Allowances
- Directors’ fees
- Payments to some contractors
- Payments by employment agencies resulting from employment agency contracts
- Value of shares and options granted to employees, directors, former directors and some contractors
- Fringe benefits
- Termination payments and accrued leave

Rates & Thresholds:

Current payroll tax rates commencing 1 July 2016:

State
Rate
Annual Wages Threshold

New South Wales
5.45%
$750,000

Victoria
4.85%
$575,000

Queensland
4.75%
$1,100,000

South Australia
4.95%
$600,000

Western Australia
5.50%
$850,000

Tasmania
6.10%
$1,250,000

ACT
6.85%
$2,000,000

Northern Territory
5.50%
$1,500,000

Reporting obligations:

The reporting requirements vary depending on each state, generally payroll tax is payable monthly. Each year you are required to complete and Annual Payroll Tax Reconciliation Form.

The forms works out a balancing tax amount, either requiring additional payment or refund from the state.

No extensions for lodgement and payment of the Annual Payroll Tax Reconciliation Form can be granted, this must be lodged by 21st July each year.

Grouping provisions:

Where you have many businesses that are related or share common employees you may be caught under the grouping provisions.

In addition, where the same person has common controlling interest in at least two business.

 

Only one member of the group can claim the groups state threshold entitlement and remaining members pay flat tax rate.