Payroll Tax Flashcards
Is payroll tax state or federal?
State. Used to be federal
How often do businesses declare payroll tax?
Employers are required to self assess each month and lodge a payment by the 7th day of following month. At the end of the year an adjustment return is lodged.
How long do employers need to keep records for?
5 years
What is payroll tax harmonisation?
On 1 July 2008 all states except WA harmonised key aspects of their systems and reached agreements to implement new uniform payroll tax rules. 1 rule is payroll tax is paid where worker resides not where they are working.
Is payroll tax applicable to every employer?
Only to companies above the tax-free threshold. Also known as general exemption or business concession. Differs by state
Does payroll tax apply to fringe benefits or non cash payments?
Yes. It taxable at grossed up amount
Are termination payments taxable as wages?
Yes. This can be payout of rostered days off, payments in lieu of notice,
Compensation for loss of job etc.
Are apprentice and trainee wages included in payroll tax?
In all except WA (exempt) others have rebates -varying. Except SA AND VIC which don’t have any.
What are nexus provisions?
They determine in which state an organisation must pay their payroll tax obligations. There are 4 tiers of tests in order that determine where paid.
First it is at employees state of residence
If they don’t have one, it’s where ABN IS registered
If neither of those apply then it’s where wages are paid to employee
If all else fails it’s where most of the work was performed.
Give 5 examples of payments that don’t require payroll tax
Workers comp
Reimbursement of business expenses
Parental leave
Car, accommodation and living away from home allowances (if over certain limits will have payroll tax applied)
Car parking fringe benefit
Name 6 organisations that don’t have to pay payroll tax
Religious institutions
Charities
Non-profit organisation
Public hospitals and nonprofit hospitals
Government department
Primary and secondary education bodies
What is the formula for calculating the amount of payroll tax for a business that pays employees in each state?
Business Concession Available = state payroll/total Australian payroll x business concession for state
Take the final business concession available off the amount for the state And x by payroll tax amount for the state.
If an employer is part of a group, how does this change the business concession?
When businesses form a group, one is nominated as receiving the concession and others have to pay tax on their full payroll amount.
What can a business do if they are not happy with an assessment of their annual payroll tax return?
Make a written objection and reasons within 69 days of assessment. If still unhappy Lodge an appeal with Supreme Court within 60 days.
Under what circumstances could penalties be imposed for not complying with payroll tax obligations?
Fail to register when required
Fail to lodge returns and pay on time
Underpays what is due
Understates wages in return
