Payroll tax is paid by employers, when your total amount paid to staff exceeds a threshold. The taxes are paid to the state government in which you are hiring the employees.
In each state of Australia the threshold differs as does the % tax rate. For example in Victoria, if your company pays $550,000 or more a year in taxable wages, then you must pay payroll tax of 4.85%.
2014/15 employer earnings threshold and tax rates:
VIC: $550,000 annually or $45,833 a month
Payroll Tax Rate: 4.85%
NSW: $750,000 annually or $61,644 (30 day month) or $63,699 (31 day month)
Payroll tax rate: 5.45%
QLD: $1.1 million annually or $91,667 a month
Payroll tax rate: 4.75%
SA: $600,000 annually or $50,000 a month
Payroll tax rate: 4.95%
WA: $800,000 annually or $66,666 a month
Payroll tax rate: 5.50%
TAS: $1.25 million annually or $102,740 (30 day month) or $106,164 (31 day month) Payroll tax rate: 6.10%
ACT: $1.85 million annually or $154,166 a month
Payroll tax rate: 6.85%
NT: $1.5 million annually or $125,000 a month
Payroll tax rate: 5.50%
Registering for payroll tax
It is up to you as an employer to know if you have reached the state payroll tax threshold and are thus required to pay this tax. When it occurs, you have up to 7 days to register for payroll tax (after the end of the first month in which your staff pay reaches the threshold).
You can also register even if you think you will pay less than the threshold. Registration is done through the Office of State Revenue (OSR) and once completed, you'll be sent a client number, and information on how to lodge returns and how to make payments.
The payroll tax office has access to extensive data and conducts regular audits of wage levels so if you do not declare your full wages and register when you should, it is highly likely you will be caught and fined.
Wages that are subject to payroll tax include total gross wages plus superannuation, allowances, fringe benefits, bonuses, commissions and termination payments.
If the business is based in a different state to where the employee is performing the work, payroll tax is to be paid to the state where the employee is working. If they work in multiple states within the same month it can be a little trickier, and a tiered test should determine which state the tax applies to.
As you can see, there can be a lot of variables involved, and it makes sense to outsource your payroll requirements, allowing them to be managed accurately and effectively.
Call us today on 03 9882 5837 to discuss your options.