Payroll tax is a state tax. It is assessed on the wages paid or payable to employees by an employer (or group of employers) whose total Australian taxable wages exceed the threshold amount. Each state and territory has its own payroll tax legislation, with different rates and thresholds.
As an agent or advisor (accountant, solicitor, tax agent, lawyer, payroll processor, legal and tax professional), you’re responsible for making sure your clients meet their payroll tax obligations.
You should monitor their wage levels to make sure they’re registered for payroll tax within seven days after the month they exceed the threshold.
We run a series of payroll tax awareness programs so you can help your client meet their obligations. The programs highlight common errors and provide information on our online resources.
Our compliance program ensures the integrity and fairness of the tax and benefit systems by:
We work closely with the Australian Tax Office (ATO) and other government agencies to share information and data. Last year we identified a payroll tax shortfall in eight out of 10 audits conducted.
Payments to contractors are liable for payroll tax unless one of these seven exemptions applies.
If your client wants to claim one of the seven exemptions, you must show sufficient documentation. For help on what records you should keep read, Commissioner’s Practice Note CPN 007.
Your clients may be grouped with other businesses for payroll tax under the following structures:
Where a group exists:
If a payroll tax group exists, your client can:
If your client needs to appoint a DGE or single lodger, complete the appropriate application form:
Shares and options granted to an employee are classed as wages.
To determine whether your client is liable for shares and options, you should understand these rules:
If your client is an employment agent, they are liable for payroll tax on wages they pay to workers. The relevant contractor provisions are not applicable where a worker is provided under an employment agency contract.
For more information to help decide on whether particular arrangements constitute an employment agency contract, read Commissioner’s Practice Note CNP 005.
If a client fails to include all liable amounts in their monthly payroll tax returns for the current financial year, you should make sure they include them in their annual reconciliation return.
Please note the due date for the 2019/20 Payroll Tax annual reconciliation has been extended to 30 October 2020.
If you find any of your clients have failed to include all liable amounts in their payroll tax returns for previous financial years, contact us to make a voluntary disclosure. Voluntary disclosures attract a lower penalty compared to cases where we identify the problem.
We have information and tools to help you and your clients understand your obligations and to comply with payroll tax. We offer:
Payroll tax assist can help you work out if your clients are meeting their payroll obligations. By answering a series of questions you’ll be able to check whether they’re lodging and paying payroll tax returns correctly.
Copies of rulings and case summaries can be found in our resource library.
If you have a question about payroll tax and cannot find the answer on this website, contact us.