Payroll Tax is a state tax obligation on the salaries paid out by employers. It is computed on the amount of salaries you pay each month and collected in each state or territory in which your employees are operating in.
That being said, not all employers will be required to pay payroll tax. For example, a business in Victoria is only responsible for payroll tax assuming that the total wages go over the annual tax-free threshold of $650,000 from 1 July 2018 to 30 June 2019, with a monthly threshold of $54,166. If the business owner is not an employer for a full financial year, the annual threshold can be adjusted. These tax-free thresholds differ between states and territories.
The payroll tax in Victoria is 4.85%, but for regional employers, it is 2.425%. A regional business is an organisation with an Australian Business Number (ABN) in regional Victoria who pays at least 85% of its payroll to regional staff.
When is the payroll tax in Victoria due?
Every single monthly payment, as well as nil return, is to be paid from seven days following the end of every month. However, if the seventh day lands on a public holiday or a weekend, the due date would be the next business day.
Lodgment and payment of the annual reconciliation (AR) are to be paid by 21 July each year. The AR is intended to reconcile all taxable wages and any payroll tax liability payments made during the financial year, excluding any interest and penalties.
Employers will need to keep records for no less than five years. The quality of the records should be good enough for a payroll tax liability to be effectively evaluated. In addition, the records must be in English, and, if needed, easily accessible to the Chief Commissioner of State Revenue.
The Chief Commissioner of State Revenue may request for you to maintain other records.
What to do as an employer
Employers are required to sign up for payroll tax in their state or territory. To register for payroll tax in Victoria, you can go to the State Revenue Office website here. For businesses outside Victoria, you can contact the Revenue Office in your state or territory for the payroll tax rate and payroll tax threshold that is applicable to you.
You may also qualify for employer-based payroll tax exemptions. Your relevant Revenue Office will be able to tell you if your business can get an exemption.
You can also contact a Sphere Accountant by clicking here, and we will be glad to assist.