Payroll Tax Compliance
Australian State and Territory Revenue Offices regularly conduct audits and investigations to ensure all liable employers are complying with their legal requirements under payroll tax legislation.
Each year large numbers of employers fail to register for payroll tax and are subject to penalties for the following reasons:
- failing to register when total wages paid in a jurisdiction exceed that jurisdiction’s monthly threshold amount;
- failing to register in each jurisdiction in which they pay wages;
- failing to register a related entity under the grouping provisions, including:
- where a holding / subsidiary relationship exists (mandatory grouping);
- where two businesses are controlled by the same person or persons (e.g. common partners / shareholders / directors / beneficiaries or any combination of these);
- the common use of employees.
Commonly identified areas that registered employers have issues with include:
- failing to include all liable wages in the total wages calculation;(i.e. director’s fees; superannuation payments; taxable fringe benefits)
- failing to declare fringe benefits and benefits under employee share schemes;
- incorrectly claiming an exemption for certain wages;
- incorrectly classifying employees as contractors;
- late lodgement and / or payment of monthly or annual returns.(monthly due by the 7th day of following month; annual by 21st day of July)
- failing to declare payments to portable long service leave and redundancy schemes (applicable in Western Australia and the Australian Capital Territory only) ;
Penalties are imposed if employers fail to register and when it is identified that an employer has provided false or misleading information in submitted payroll tax returns or in response to requests for information.
Recent statistics gathered from Australia-wide compliance activities identified that over 90% of involuntary payroll tax registrations fitted into one of the following four categories;
- An employer’s total wages exceeded the threshold in a jurisdiction where they employ;
- An employer was liable for payroll tax only when their interstate wages were taken into account;
- A grouped employer was liable for payroll tax when the group’s combined Australia-wide wages were taken into account;
- When wages paid to liable contractors were included, the total Australia-wide wages resulted in a liability for payroll tax.
Employers who voluntarily declare their liabilities may receive significantly lower penalties than those who do not.
For information on specific state or territory Compliance activities, click on the applicable state or territory name below.