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Information for businesses that have recently registered for payroll tax in NSW, including calculating taxable wages and common errors made in returns.
On this page
Now that your business is registered for payroll tax you need to understand your ongoing obligations.
Revenue NSW relies on you to voluntarily self-assess your taxable wages.
We also expect you to complete regular tasks when they are due, such as lodging returns and paying your payroll tax.
Payroll tax legislation is complex. To help you get started we have detailed 6 key actions that will help your business avoid potentially costly errors.
Manage your payroll tax with Payroll Tax Online
Now that you are registered for payroll tax you can use Payroll Tax Online to:
calculate your monthly payroll tax, or lodge a nil return
set up estimate monthly calculations
set up online payments (direct debit)
lodge and pay your annual return
view payment options, payment reference codes and payment frequency
view last year’s lodged annual return
change your group status details
apply for an exclusion from grouping, and
cancel your payroll tax registration.
To use Payroll Tax Online you will need to log-in using your Client ID and a Correspondence ID.
The Correspondence ID is valid for 16 months from the date of issue of the letter.
Contact us if you do not have a Client ID or a Correspondence ID.
Read the report changes to your business page for instructions on how to update information in your Payroll Tax Online account.
Know when to lodge returns and pay
You need to declare your total taxable wages in your payroll tax returns.
Annual returns
All businesses registered for payroll tax in New South Wales must lodge an annual return and pay their payroll tax by 28 July each year, or the next business day if that date is on a weekend or public holiday.
Read the lodge your annual return page for more details, including the information you will need to provide.
Monthly returns
If your annual payroll tax liability for NSW exceeds $20,000 you must pay payroll tax monthly.
Monthly returns are due 7 days after the end of each month, or the next business day if the 7th day is on a weekend or public holiday.
There are two methods for calculating your monthly payroll tax – the estimate wages method and the actual wages method. If your annual tax payable is more than $150,000 you must use the actual wages method.
You will also need to identify wages that are taxable in New South Wales, as well as any wages that may be taxable in any other Australian jurisdiction.
Nexus provisions in the Payroll Tax Act 2007 determine in which jurisdiction payroll tax is to be paid. Read the nexus provisions page for more details.
Why accuracy is important
An error in your calculations may result in the underpayment of payroll tax, which is also known as a tax default.
Interest will be imposed on any underpayments or overdue payments. Your business may also be liable for penalty tax. Read the interest and penalty tax page for more details.
In some cases an error may lead to an overpayment of payroll tax. If this occurs your business may be entitled to a refund. Read more about payroll tax refunds.
An entity is considered non grouped when it is not linked with any other business. This means you are only responsible for reporting your own wages, whether they are only in NSW or multiple states/territories.
You will need to include your:
gross NSW wages and
any interstate wages, submitted under the entity’s ABN.
This will ensure that you are reporting your total Australian taxable wage for your entity.
If you are not grouped with another entity, lodge returns as ‘Non grouped’.
Non grouped entities are entitled to the full NSW tax-free threshold, unless employing interstate or only for part of a financial year, then the threshold will be apportioned.
Grouped
Your business may be grouped with other businesses and entities if there is a link between them. Grouping can occur regardless of where the businesses are located or the industries they operate in.
One member of the group, the Designated Grouped Employer, (DGE) claims the threshold.
All remaining group members pay payroll tax at the flat rate and are known as a Non Threshold Claiming member.
All members of the group lodge a return.
Grouped with interstate only members
If your business employs in NSW, and all other group members employ solely in states outside NSW (with a different ABN), you must lodge as a DGE and report those only employing outside NSW, as interstate only group member(s).
This option is mandatory if no group member is over the monthly tax-free threshold on its own.
If you lodge as a Group Single Lodger (GSL) you must report the total gross Australian wages for all group members in each return.
Monthly returns will require total wages paid for the group, while annual returns will request both the group’s gross Australian wages and a breakdown of wages per member for the financial year.
You are the only member of the group required to lodge a return, as you do so on behalf of the group.
The other members of the group are called Non-Lodgers. A Non-Lodging member does not submit returns. Their wages are to be reported to the GSL for lodgement.
You must include wages paid in other Australian states or territories when you lodge your NSW payroll tax returns.
If employing interstate, your business will not be entitled to the full threshold in NSW because of the interstate wages.
Entities that employ in both NSW and interstate may be confused when lodging as part of a group, particularly if some group members only employ interstate.
A common mistake made is confusing the responsibilities of a Group Single Lodger (GSL) with those of a Non-grouped entity (NG).
A GSL is responsible for lodging a payroll tax return on behalf of the entire payroll tax group, including total wages for all group members, not just their own business.
It is essential to ensure the combined total gross wages of all group members are reported accurately, with the appropriate breakdown for each member, to ensure proper calculation of the threshold and tax liability.
A NG entity is only responsible for lodging payroll tax returns for its own business, not for any other entities.
You 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.
We regularly conduct audits to make sure businesses are paying the correct payroll tax. We will audit your business if we think you have understated your wages.
Our audits help businesses improve their compliance and may raise awareness about any future payroll tax obligations.
If selected for an audit you will need to follow the instructions of an auditor and supply information about your business.
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.
Payroll Tax Australia
Visit Payroll Tax Australia for general information about payroll tax, including revenue offices in other jurisdictions, and watch their video below.
