As a payroll processor, you must pass on payroll tax to the relevant state revenue offices.
Some contracted payroll processors are not passing on payroll tax, even after receiving the funds from the employer. Employers must then meet their outstanding tax liabilities and attempt to recover the amounts already paid to the payroll processor.
Payroll tax is a tax on wages. It’s payable when your wages first exceed the monthly threshold amount. The 2020/21 threshold is $1,200,000, and the full threshold applies if you employ only in NSW and for the full financial year.
Several factors determine whether you get the full threshold entitlement.
If you start or stop employing in NSW within a financial year you’re not entitled to the full threshold. You’ll receive a proportion of the threshold equal to the number of days you employ to the number of days in a year.
If you pay wages in another Australian state or territory, the threshold is calculated as a proportion equal to the ratio of NSW wages to total Australian wages. For example, if 80 per cent of your total wages are paid in NSW, you’re entitled to 80 per cent of the threshold.
If your business is part of a group of businesses, only one threshold applies to the whole group.
Find out about the most common errors businesses make when calculating their payroll tax.
We have information and tools to help you and your client understand your payroll tax obligations.
By answering a series of questions, payroll tax assist can help you work out if you, or your clients, are meeting your payroll tax obligations.
The payroll tax anti-avoidance provisions apply where an arrangement reduces or avoids liability for payroll tax. There does not need to be proof the arrangement was intentional. What matters is the effect the arrangement has on the payroll tax liability.
We examine the facts and circumstances of your business to work out whether to apply the provisions.
We disregard any arrangements, including contracts, when the payroll tax anti-avoidance provisions apply. Your business is then considered an employer and all payments are taxable wages. You’ll be given a notice outlining the details.
If you have a question about payroll tax and cannot find the answer on this website, contact us.