83,333Payroll tax is dictated by your resident state or territory. It is a tax employers must pay if they meet certain eligibility criteria. As such, it’s important to understand the differences in Victoria’s payroll tax to ensure your business is meeting its obligations.
This article details everything you need to know about Victoria’s payroll tax so you can navigate its requirements with ease. For personalised advice, contact our team at Curve Accountants today.
What is Payroll Tax?
Payroll tax is a tax employers must pay if their employee wages exceed the threshold amount indicated by their state or territory. By combining the amount you pay your employees annually, you can determine whether or not you meet or exceed the payroll tax threshold.
Your payroll tax is usually self-assessed and lodged directly by the business’s employer. In Victoria, this payment is lodged with the State Revenue Office.
Payroll Tax Requirements in Victoria
As with every state and territory, Victoria has its own tax threshold to indicate whether or not a business must pay payroll tax. Likewise, Victoria has broken this threshold down into a few different eligibility criteria to better help employers understand what applies to them.
You are required to register for and pay payroll tax in Victoria if you pay wages in the state and any of the following conditions are met:
- Your total Australian wages surpass $83,333 per month (the general exemption threshold in Victoria).
- Your total Australian wages exceed $1,000,000 for the entire financial year.
- Your total Australian wages are combined with those of other businesses, and the group’s combined Australian wages exceed the Victorian general exemption threshold of $83,333 per month.
Penalties
If you meet any of the above criteria and are not registered or making your required payments, penalties will apply. For any missed payments, you will likely be required to pay an additional 25% penalty rate alongside interest dictated by the market.
Likewise, late payments will also face an interest rate penalty of plus 8%. If you have a valid reason for being unable to meet the payroll tax requirements, you may be able to negate these penalties. However, you will need sufficient proof.
Calculating Your Payroll Tax
Payroll tax is calculated in Victoria based on your total annual taxable wages. If you exceed the wage threshold, currently your exact wage total will be taxed at 4.85%. However, this rate may also change yearly alongside threshold amounts.
However, if you are a regional Victorian employer, you will be taxed at a lower rate. Currently, in 2024, that rate is 1.2125% of your total taxable wages. A regional employer is defined as an employer who pays 85% of their taxable wages to regional employees. These regional employees must be based and perform more than half their services in regional Victoria.
Navigating Payments
Payroll tax is generally paid monthly. To do so you will likely have to conduct a self-assessment each month to determine how much you must pay. Then this payment must be submitted alongside your wage details by the seventh day of the following month. However, depending on where this day falls, it may be due on the next business day following the seventh.
To meet your payroll tax requirements you must first be registered with Victoria’s State Revenue Office. You will likely need your payroll detail records to fill out the required documents accurately.
Once registered, employers can use the Payroll Tax Express system to pay their taxes. This system is used to lodge returns, your annual reconciliation, and update your records. Likewise, Payroll Tax Express can also be used to apply for refunds, receive immediate confirmations, and view your previous taxation records.
Calculating Wages
While your annual taxable wages are generally calculated by combining them, certain wages can be excluded. These wages include caregiver leave, Commonwealth-paid parental leave, and redundancy benefits.
Similarly, early retirement payments, apprentice and trainee wages paid to approved groups, and wages paid for emergency response or military leave can also be excluded.
Preparing for Payroll Tax in Victoria
Meeting your tax obligations is the best way to avoid costly penalties. It can also help you track and record your wage history to better manage your business. If you’re not sure how to navigate Victoria’s payroll tax, reach out to our team today.
At Curve Accountants, we understand the ins and outs of tax regulations and requirements. We can help your business calculate your taxable wages as well as your monthly payroll tax instalments. To stay ahead of the curve and keep your business on track, contact our professional team.
