Payroll tax is a State and Territory tax on wages that you as an employer pay your employees. It is calculated based on the amount of wages that you pay employees Australia-wide per month.
There are a number of changes that will have occurred to payroll tax (as implemented in July 2021). Each of the listed States and Territory has had different changes implemented to their payroll tax requirements and thresholds, which need to be addressed by employers like you (or us, if you use a bookkeeper or accountant to help with payroll tax). You need to ensure that you are up to date with these changes to maintain compliance and avoid punishment for non-compliance.
ACT payroll tax rate continues as 6.85% on payrolls over $2 million per annum. The payroll tax exemption for apprentice and trainee wages (introduced as part of the Government’s COVID-19 response) is extended for wages paid until 30 June 2022.
NSW Payroll Tax threshold for the 2021 year was increased to $1,200,000. It was backdated to 1 July 2020, and is unchanged for 2021/22. The rate has also reduced to 4.85% for the 2021 and 2022 financial years. The NSW government has also announced payroll tax relief measures as part of its to help businesses impacted by COVID-19. You can find out more about these measures on their website.
The current threshold for 2020/21 is $1.3M but they have different rates of payroll tax:
- 4.75% for employers or groups who pay $6.5M or less in Australian Taxable Wages;
- 4.95% for employers of groups who pay more than $6.5M in Australian Taxable Wages;
There is a 1% discount for regional employers until 30 June 2023.
The current tax-free annual threshold for 2020/21 is $700,000 pa with a rate of 4.85% for non-regional employers. The annual threshold is adjusted if you are not an employer for a full financial year. For 2021-22, the rate of payroll tax for regional Victorian employers is 1.2125%. There is also a special payroll tax rate for businesses in bushfire affected local government areas.
Each state revenue office will have additional information and rules surrounding JobKeeper payments and relief measures in relation to payroll tax such as exemptions.
Make sure you speak with us to ensure that you are meeting your current tax obligations for your state, and always inform us of any changes to your business that might impact them.