Getting payroll tax right from the start is important. We find that many employers owe additional payroll tax because they’re not declaring the correct amount of liable wages. These employers are often subject to penalty tax and interest, in addition to the unpaid tax.
Don’t let this happen to you.
To help you get it right, here are a few suggestions on how to avoid the most common errors that businesses make when calculating their payroll tax liability:
- Superannuation – all contributions to superannuation you make on behalf of an employee are liable for payroll tax. This also includes superannuation payments exceeding the superannuation guarantee charge, salary sacrifice amounts, and additional superannuation paid to a director outside of the payroll system.
- Grouped businesses – for payroll tax purposes, your business may be grouped with other businesses if there is a link between them. Grouping can occur regardless of where the businesses operate. This will have implications on your threshold entitlements.
- Payments to contractors or consultants providing services under a contract are liable for payroll tax unless, one of the seven exemptions apply. You must keep evidence to substantiate your claim for an exemption.
- Apprentice/trainee rebates – you can only claim the rebate on apprentices and new entrant trainees, not existing worker trainees. These employees must also be registered with the NSW Department of Industry for the duration of their qualification.
- Fringe benefits – all taxable fringe benefits are liable for payroll tax.
- Interstate wages – you must include wages paid in other Australian states or territories when you lodge your NSW payroll tax returns. Your business can’t claim the full threshold in NSW because of interstate wages.