Spotlight on Payroll: The what, the how and the when of Payroll Tax

StuartTax

As we round out the last half of the calendar year, we thought we’d talk Payroll. We always get a lot of questions about Payroll, so our October blogs will cast a spotlight on Payroll. This week we’re talking Payroll Tax: What it is, how to find out if you’re liable to pay it and when.

What is Payroll Tax?

Payroll Tax is a general purpose tax applied in all Australian states and territories, that is calculated on wages paid, or payable, by employers. Employers are required to self-assess their liability at an agreed frequency with an annual adjustment reconciliation performed at the end of each financial year on 21 July.

Payroll tax is applied to all business wages that exceed the annual payroll tax threshold. In NSW this is $750,000 (for more information on other states payroll tax thresholds click here)

Wages are classified as:

  • salaries
  • allowances
  • director’s fees
  • super
  • the gross value of fringe benefits.

Is your business liable to pay Payroll Tax?

The payroll tax rates and thresholds vary between states and territories however in NSW, the monthly threshold is calculated using the number of days in the month, divided by the number of days in the year, multiplied by the threshold at 5.45%.

If your business exceeds the monthly wages payable threshold, your business will need to register and pay Payroll tax.

Days in the monthThreshold
28 days$57,534
30 days$61,644
31 days$63,699

I’m liable. When do I pay?

Payroll tax reporting requirements vary between states. Generally, payroll tax is payable monthly within 7 days after the end of each month. To calculate and pay your monthly liability, use the payroll Tax monthly calculator.

You will be required to pay your liability and complete and submit an Annual Reconciliation Form on the 21st of July of each year.

Adhering to reporting obligations

When keeping records you must meet the following requirements:

  • They must be sufficient to enable a payroll tax liability to be properly assessed.
  • Records need to be kept for no less than five years.
  • The Chief Commissioner can require a person to keep additional specified records.
  • Records must be kept in English or in a form easily translated to English.
  • Records must be readily available for production to the Chief Commissioner if required.
  • Recording and managing your Payroll in accounting systems such as Xero, simplifies the above and removes the risk of human error.

Need to discuss your payroll tax matters?

Let’s talk. 

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