The complexities of payroll tax


Australian business owners generally have a raft of expenses they have to account for. Along with the company tax, employers also have to pay 9.5 per cent of an employee's pay cheque into their superannuation account.

It doesn't stop at the 9.5 per cent employee super contribution either, there is also a payroll tax. This tax is levied on the wages paid to your workers, and differs from state to state. For instance, the payroll tax in Victoria is 4.85 per cent, in South Australia it's 4.95 per cent, it sits at 5.5 per cent in Western Australia and at 5.45 per cent in New South Wales.

Not only that, but every state has a different wage threshold - the total Australian wages you can pay to be exempt from the tax. These also vary by the number of days in the month. For instance, in New South Wales, for a 31 day month, the threshold is $63,699; for a 28 day month, it falls to $57,534.

This complexity means that more often than not, the services of an accountant will be crucial.

Getting help for the payroll tax

All of this serves to make the payroll tax rather complex, particularly if you have employees across state lines. Because most employers are required to self assess, identifying whether your employees earned more than the threshold of the state they're in can quickly become confusing and time consuming. On top of this, there are other considerations such as overtime, bonuses, unused leave payments and fringe benefits that further complicate things.

Although there are frequently calls to amend or eliminate the payroll tax, it doesn't look like it's going away any time soon. To ensure you're meeting your payroll tax obligations, and navigate its complexities, seeking the services of a accountant is a good idea.