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If you make an error in your annual reconciliation for payroll tax, Revenue NSW encourages you to make a voluntary disclosure.
On this page
What is a voluntary disclosure?
A voluntary disclosure is when a business informs Revenue NSW about an error in its payroll tax annual reconciliation.
An error may result in the underpayment of payroll tax, which is also known as a tax default.
An error may also lead to an overpayment of payroll tax. If this occurs your business may be entitled to a refund. Read more about payroll tax refunds.
If your business discovers an error we encourage you to submit a voluntary disclosure as soon as possible.
Voluntary disclosures attract a reduced level of penalty tax compared to cases where we identify an underpayment. The full interest rate will still apply.
What information is required?
Voluntary disclosures must be in writing and provide enough detail for us to determine the nature and extent of the error.
Include the following information:
Business name and contact details.
If the voluntary disclosure is submitted on behalf of a client, the name and contact details of the representative/advisor submitting the voluntary disclosure.
Details of the adjustment required and the tax year in which the error occurred.
A breakdown of the adjusted wages in each impacted tax year.
A detailed description of the error and the reason it occurred.
The total value of the error in each impacted tax year.
Documentary evidence relevant to the disclosure (where requested).
COVID-19 tax relief measures
Several measures were introduced to assist our customers with the impacts of the COVID-19 pandemic. One of these measures is still relevant to consider as it may impact your disclosure in relation to the 2021/22 financial year.
Businesses with total grouped Australian wages of $10 million or less who experienced a 30% decline in turnover were eligible for a 50% reduction of their 2021/22 payroll tax liability.
If you were eligible for the 50% reduction for the 2021/22 financial year, you can include this in your voluntary disclosure.
Where voluntary disclosures relate to grouping/ownership issues, ASIC records demonstrating:
changes to the appointment or cessation of a director, and/or
acquisition or disposal of shareholdings.
Where voluntary disclosures relate to trust grouping issues:
trust deeds
amending deeds, and/or
unit holder registers.
Other government documents, such as Training Services NSW indenture papers for apprentice and trainee rebates.
Example
Blue Pty Ltd employs staff in NSW and in several other Australian states.
Blue Pty Ltd recently conducted an internal review of the last 4 years of their payroll tax annual reconciliations and identified that they mistakenly excluded their taxable fringe benefit values in all 4 years.
Blue Pty Ltd prepared a voluntary disclosure to Revenue NSW regarding the error.
The voluntary disclosure letter to Revenue NSW included:
the total of the error being disclosed, both the under-stated taxable fringe benefit amounts and the under-paid tax
the reason the error occurred
the calculation of the taxable fringe benefit values
a breakdown of the taxable fringe benefit values that should have been included in the payroll tax returns for the 2019 – 2023 tax years, and
whether they should be included in the NSW or interstate wage disclosures.
What errors can I disclose?
Any error that has led to a tax default can be included in a voluntary disclosure.
Email your written voluntary disclosure and any supporting evidence/records to [email protected]
You may lodge a voluntary disclosure at any time, including before or during an audit.
Voluntary disclosures can be made for tax defaults within 5 years of the last assessment of a tax liability.
What happens after I submit a voluntary disclosure?
We review voluntary disclosures to confirm that an error has occurred and to ensure that it has been fully disclosed.
If we can determine your payroll tax liability or overpayment you will receive an amended payroll tax assessment.
The amended assessment includes details of the:
overpayment or outstanding liability, and
interest and/or penalty tax applied to any additional liability.
We may request more information from you if:
your disclosure is incomplete
the issues you disclose are complex, or
we identify further issues for review.
If any of the issues require further review we may commence a payroll tax audit of your business. If selected for an audit you will receive a written Notice of Investigation.
Any voluntary disclosure received prior to the start of an audit will be reviewed as part of the audit process.
If the error is due to a failure of one of your internal processes we recommend you review and adjust existing processes or procedures to ensure the error does not occur again in the future.
How is penalty tax and interest calculated and applied?
Penalty tax will not be imposed to an error:
if you make a voluntary disclosure before the error is discovered by us, and
the disclosure provides sufficient details of the nature and extent of the tax default that enables us to determine your payroll tax liability.
Please note, while no penalty tax will be applied in the above circumstances, full interest will still be imposed on any underpayments.
Once an audit has commenced
You are entitled to a reduction in penalty tax if you voluntarily make a written disclosure that enables the Auditor to determine the nature and extent of the error.
Should you receive a Notice of Investigation and identify any errors prior to the submission of the requested information, the rate of penalty tax may be reduced by 20 per cent at the conclusion of the audit. Interest is also imposed on these types of underpayments.
This does not apply to registered taxpayers if a voluntary disclosure is made after a failure to lodge a return or pay tax in accordance with the relevant legislation.