Business owners are often unaware of what Payroll Tax is and when the obligations for payroll tax arise. Our blog article here examines the details of Payroll Tax – minus the technical jargon, so you, the business owner, are absolutely clear on how Payroll Tax affects you and your business.
When does my business need to register for Payroll Tax?
In Victoria you need to register for payroll tax with the State Revenue Office when your business’s monthly wages exceed $45,883, and annually is greater than $550,000. Each state and territory in Australia has its own threshold and lodgement requirements. If you have employees in different states within Australia, you need to be aware of these thresholds. The monthly wages are comprised of: wages, salaries, allowances, commissions, bonuses and super contributions.
It’s important to note that not all organisations are required to register; non-for-profit, public benevolent institution, religious institutions you are exempt from paying payroll tax.
Are subcontractor payments relevant in the calculation of Payroll Tax?
Some contractor payments are included in calculating the wages amount, particularly where the contractor is deemed to provide predominantly labour services and work exclusively or primarily for one designated person in a financial year.
Even though you may consider someone to be a contractor, the State Revenue Office may consider them a regular employee. For example, only a ‘person’ can be an employee, so generally if you engage someone though a trust or company structure, these are not considered employees by normal measures. However, the State Revenue Office may include they payments under the threshold.
There are other factors to consider when determining whether a person is a contractor or employee for payroll tax purposes. These can be specific to each business and may change in combination with other factors. Some of these include; who has control and direction, the contract and practical relationship between the parties, are the contracts in place to achieve a “given” or determined result; is the business independent, does the contractor or business have the power to delegate, who bares the risk of the contract, who provides the tools and equipment.
If it is deemed that the subcontractors are in fact employees for payroll tax provisions, the next step is to then consider if the contract is “relevant”. This is where is gets highly technical and professional guidance on the topic is recommended. It is important to note that if contractor fees are deemed to form part of wages, they are included as GST exclusive.
What are the Payroll tax reporting requirements?
You are required to lodge monthly returns and an annual reconciliation report to the State Revenue Office. By lodging monthly it ensures that your business has paid the correct amount of payroll tax, while the annual reconciliation ensures that your wages have been recorded correctly for the financial year.
The PTX Express service provided by the State Revenue Office is the easiest way to process and manage your payroll tax obligations. You can lodge your monthly returns and your annual reconciliation through this service.
For any further queries relating toPayroll Tax or on any other matter please get in touch with us at Platinum Accounting & Taxation (03) 9746 6479 or firstname.lastname@example.org or hit us up on Facebook.We’re responsive. We reply. Promptly.