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Business growth can lead to errors in payroll tax returns. Growing businesses should regularly check that they are still meeting their payroll tax obligations.
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If your business is registered for payroll tax in NSW you should regularly review your obligations.
This will help you correctly declare all taxable wages in your payroll tax returns and pay on time.
This is important because errors may result in the underpayment of payroll tax, which is also known as a tax default.
Full interest will be imposed on any underpayments or overdue payments. Your business may also be liable for penalty tax.
In some cases an error may also lead to an overpayment of payroll tax. If this occurs your business may be entitled to a payroll tax refund.
These 5 actions will help you stay on top of your payroll tax as your business grows.
Look out for changes in your business
Some common situations faced by growing businesses may change the way you calculate and pay your payroll tax.
Hiring more employees may increase your payroll tax liability.
If this occurs your business may need to change how it lodges returns and pays payroll tax.
If your annual payroll tax liability for NSW remains under $20,000 you must lodge and pay annually. You also have the option of lodging annually and paying monthly.
Once your annual payroll tax liability for NSW goes over $20,000 you must lodge annually and pay monthly.
If your management or staffing changes, or you change your professional representative, you must advise us of the change as soon as it occurs. Read the report changes in your business page for more details.
If you start employing trainees and apprentices you will need to know the rebates you can claim on their wages. Read the apprentice and trainee wages page for more details.
As a business already registered for payroll tax you know that wages and superannuation are liable for payroll tax.
To increase growth your business may change the types of wages offered to attract different types of workers, such as sales managers or senior executives.
If you offer different forms of wages, you must understand how they are treated for payroll tax.
Payroll tax audits show that growing businesses often make errors with taxable wages they are not familiar with, such as:
If your business expands into other Australian states or territories or becomes grouped with a business that does, it may affect your ability to claim the full payroll tax threshold.
You will need to identify wages that are taxable in New South Wales, as well as any that may be taxable in every other Australian jurisdiction.
Nexus provisions in the Payroll Tax Act 2007 (PTA) determine in which jurisdiction payroll tax is to be paid. Read the nexus provisions page for more details.
Payroll tax is harmonised between states and territories with minor differences.
If you are unsure if a payment is subject to payroll tax, contact the relevant state or territory revenue office.
You will need to ensure the contact details of your business are up to date so that you receive important letters from us, such as the annual return reminder and your notice of assessment.
You will also need to report other changes in your business, such as your grouping status.
Always maintain records to verify how you calculated the wages declared in your payroll tax returns. Records must be:
retained for at least 5 years
sufficient for a payroll tax liability to be properly assessed
in English, or a form easily translated to English, and
readily available to us if requested, for example as part of a payroll tax audit.
Disclose errors in your returns
Contact us to make a voluntary disclosure if you have not declared all liable amounts in your payroll tax returns.
Voluntary disclosures attract a reduced level of penalty tax compared to cases where we identify an underpayment. Interest will still be applied. Read the interest and penalty tax page for more details.
Non-compliance identified through our data matching activities may result in penalty tax and interest charges, in addition to any underpayments detected.
Payroll tax assist can help you work out if you are meeting your payroll obligations. By answering a series of questions, you will be able to check whether you are lodging and paying payroll tax returns correctly.
