PAYROLL TAX – 10 things you need to know

The bigger you are, the more it costs.  Here’s another tax that hits employers when their wages bill for all staff goes over $550,000 per annum.  No wonder small businesses stay small.

  1. What is Payroll Tax? – Payroll Tax is a state tax on the wages paid by employers when the total wages exceed a certain threshold.
  2. Threshold – Exemption thresholds vary between states. In Victoria it is $550,000 in a financial year or $45,833 per month.
  3. Tax rate – 4.9% of the gross value of wages paid
  4. PAYG Withholding Tax vs Payroll Tax – Payroll Tax is not the same as PAYG withholding tax collected by the ATO. PAYG Withholding is the tax deducted from an individual’s wage and forwarded to the ATO.  It is often call “Group tax”.
  5. Self Assessment – You are required to self assess the situation every month and pay when you exceed the monthly threshold.
  6. Payment – Within 7 days of the end of the month.
  7. What makes up Wages – Payroll Tax is payable on the sum of the wages, salaries, allowances, commissions, superannuation, fringe benefits (grossed up amount), shares and options granted to employees, directors fees, and the taxable portions of eligible termination payments and accrued leave.
  8. Exemptions– The following organisations are generally exempt from payroll tax, provided specific qualifying conditions are met:
    • Religious Institutions
    • Public Benevolent Institutions
    • Public or Non-profit Hospitals
    • Non-profit Non-Government schools
    • Charitable Organisations
  9. Australia-wide wages – Payroll tax rates and thresholds differ in each state and territory.  Basically you get one threshold for the whole of Australia.  The calculation is difficult, requiring you to apportion each states threshold in the ratio of that states wages to the Australian wages total.  Call us for help.
  10. If you’d like to know more about Payroll Tax and how to deal with it,
    call the office on (03) 9585 7555 and ask for Noel or Amanda,
    or email us atnoel@noelmay.com.au