Payroll Tax

Payroll tax is a state-based tax which is levied on salaries, wages, superannuation and some contractor payments.

When the total of these payments reaches a threshold, employers must report and pay payroll tax periodically, and lodge an annual return. The threshold is different in each state, however all payments Australia wide must be reported.

Payments to contractors may need to be included in payroll tax calculations and reporting. If the contractor is predominantly providing labour services and work exclusively or primarily for one designated person in a financial year, it is likely that their payments will need to be reported for payroll tax purposes.

Related entities may be considered a group for payroll tax purposes. If it is determined that related entities are a payroll tax group, the group must report wages paid from all entities within the group. Payroll tax is calculated on the whole group.

We can assist with the process of registering and reporting payroll tax for your business, including preparing the annual wages reconciliation for payroll tax. We also offer the service of determining if a group of entities is related for payroll tax process.

There is constant improvement on data matching between government agencies, along with an increased amount of audits being completed by the states in relation to payroll tax. This needs to be considered if your payments to employees and contractors are getting close to the threshold, and you should be considering whether you are required to be registered for payroll tax.

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