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If your business has recently registered for payroll tax in NSW you will need to calculate and pay your payroll tax by the due date. Learn how to avoid common errors made by businesses new to payroll tax.
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 laws are complex. To help you get started we have detailed key actions that will help your business avoid potentially costly errors.
What you need to do
Here are 4 key actions that will help you stay on top of your payroll tax:
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.
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.
Common calculation errors
Here are a few suggestions on how to avoid the most common errors that businesses make when calculating their payroll tax liability.
Some industries have unique payroll tax issues. See the Your industry section for more details.
You need to declare your taxable wages in your payroll tax returns.
All businesses registered for payroll tax in New South Wales must lodge an annual reconciliation 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.
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 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 reconciliation 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 the calculation methods you used to include payments to workers in your monthly returns and annual reconciliations.
You must keep records for at least 5 years. Records must be:
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.
Disclose errors in your returns
Contact us to make a voluntary disclosure if you have not declared all liable amounts in your annual reconciliations and/or monthly 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.
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 reconciliation
view payment options, payment reference codes and payment frequency
view last year’s lodged annual reconciliation
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.
Resources for new payroll tax customers
Rulings, practice notes and case summaries
As your business grows you may need more detailed payroll tax information to self-assess your liability.
Revenue Rulings clarify our interpretation of the law, especially when the law is unclear or complex. Read payroll tax Rulings.
Commissioner Practice Notes contain information and guidance to make it easier to comply with the legislation. Read payroll tax Practice Notes.
Case Summaries are developed by the NSW Crown Solicitors Office and outline judgements made in cases against the Chief Commissioner of State Revenue. Read payroll tax case summaries.
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.