Step-by-step guide to payroll tax
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Step-by-step guide to payroll tax

A step-by-step guide to payroll tax including how to pay, lodge returns and record keeping.

Chapters

  1. What is payroll tax?
  2. Do I need to register / pay?
  3. How do I pay?
  4. How do I lodge returns?
  5. What happens if I don’t lodge or pay?
  6. What are liable wages?
  7. What records must I keep?
  8. Common errors
  9. What to be aware of as your business grows
  10. Industry-specific payroll tax
  11. Compliance

9. What to be aware of as your business grows

As your business grows, you should regularly check that you’re still meeting your obligations. Here are a few things to keep in mind.

Grouping

For payroll tax purposes, businesses can be grouped with other businesses if there is a link between the companies. Grouping can occur regardless of where the businesses operate. Grouping has important implications for calculating threshold entitlements.

Where a group exists:

  • the threshold entitlement is based on the proportion of NSW wages against total Australian wages
  • a single threshold deduction applies to the group
  • every member of the group is liable for any outstanding payroll tax of other group members.

Contractors

Payments to contractors are liable for payroll tax, unless an exemption applies. To determine if an exemption applies, check:

  • if the contractor is an employee, even if they have an ABN or call themselves a ‘contractor’
  • if your contract is an employment agency contract.

You can’t claim an exemption if the contractor is an employee or if you’re an employment agency contract.

Refer to information available from the ATO and Revenue Ruling PTA 038 to help you decide if the contractor is an employee.

Apprentice and trainee wages

If you employ apprentices or trainees and want to calculate the apprentice/trainee rebate, you’ll need to:

  1. Include all apprentice and trainee wages and work out your payroll tax payable
  2. Exclude all apprentice and trainee wages and work out your payroll tax payable
  3. Subtract calculation 2 from calculation 1 = apprentice/trainee rebate.

Shares and options

If some or all your wages are paid as part of an employee share scheme, you should include these in your payroll tax returns.

Employment agents

Under an employment agency contract, an employment agent obtains the services of a worker for a client. All the payments made by the employment agency for the services of the worker are deemed to be wages on which payroll tax is payable.

Fringe benefits

All taxable fringe benefits under the Fringe Benefits Tax Assessment Act 1986 are liable for payroll tax. If the benefit is exempt or has a nil value, it’s not liable for payroll tax.