Payroll tax is a State/Territory tax levied on the remuneration of employees and payable by employers.
Whilst there are differences between the legislation in each Sate and Territory, payroll tax laws have the following common themes:
- Payroll tax is calculated as a percentage of the excess of an employer's total Australian wages over a general exemption threshold
- Each particular Sate/Territory defines what constitutes taxable remuneration for payroll tax purposes
- Certain employers are exempt from paying payroll tax
- Where a business operates in several Sates/Territories, provisions exist in each jurisdiction to ensure the correct amount of payroll tax is paid in each State/Territory
- An annual payroll tax is required to be lodged after reconciling the payroll tax payable for the year after deducting payments already made during the year
In NSW, the rate of payroll tax from 1 July 2012 is 5.45% of the excess of the University's total Australian wages over the general exemption threshold of $689,000, and it is calculated on the following:
- General concept of wages including penalty rates, and bonuses
- Eligible Termination Payments
- Fringe benefits
- Superannuation benefits from 1 July 1996
- Payments under an employment agency contract to a worker
- Generally all allowances paid except car, travel and accommodation allowances which are subject to concessional treatment prescribed by the ATO
- Wages paid outside NSW for services performed wholly in NSW
Payroll tax is not included on the following payments:
- All wages paid to an employee who is employed under a group apprenticeship scheme approved by the NSW Department of Education and Training
- Wages paid to an apprentice within the meaning of the Apprenticeship and Traineeship Act 2001
- Workers compensation payments, except for make-up pay
- Maternity or adoption leave up to 14 weeks paid in addition to an employee's normal leave entitlements
- Reimbursement of the exact amount of an employee's receipted business expense
Entities are considered to be members of a group where one of the following factors is satisfied:
- A holding company/subsidiary relationship exists
- Two or more businesses share the use of employee
- A common controlling interest in two or more business
The following controlled entities of the University are grouped and liable for payroll tax:
- GradSchool.com Pty Ltd
- Newcastle Innovation Limited
The following controlled entities are exempt from paying payroll tax:
- Hunter Uni Clinic ATF Cessnock Uni Clinic
- UoN Services Ltd
Under the grouping provisions, the members of the group are treated as a single entity so the general exemption can only be claimed once, and the entity must be nominated to claim for the entire group.
Individual members of the group are required to be registered for payroll tax and remit their own payroll tax liability.
Lodgement of Monthly/Annual Returns
The University is required to lodge a monthly payroll tax return to the Office of State Revenue by the 7th day of the month following the month of the return in which wages taxable wages were paid.
An annual reconciliation is required at the end of the financial year which is due and payable on or before the 21 July.