Payroll Tax

Storm:

Hey, everyone. We’re talking to you today very briefly on payroll tax. It is a very short introduction, just a teaser, to get you informed on what payroll tax is and if you’re liable for it. It is not advice and it is not particular to your circumstances, so please make sure you always seek legal advice. My name is Storm. I work for Westcourt Family Business Accountants and with me today, I have Toni.

Toni:

Hi. Thanks, Storm. Thanks for the intro. So generally just what is payroll tax and when are you going to have to pay it? So payroll tax is a state-based tax and it’s usually collected by a state organization. In WA, it’s collected by the Department of State Revenue and it’s collected when your taxable wages, which isn’t just your wages. It includes things like superannuation and fringe benefits and other things like that. So there’s always a list of what the taxable wages are made up of. When your taxable wages exceeds sort of a certain threshold. So reporting for payroll tax is usually done on a monthly basis with an annual reconciliation completed in June. So Storm, you just want to speak just more about how payroll tax interacts when you’re working across various sites.

Storm:

Thanks, Toni. Yeah. So it is, as Toni has said, a state-based tax, so it’s not federal. So each state obviously has its own rules, its own revenue department that’s collecting this tax that you pay and each state has its own thresholds as well, just to add to the complication, starting from as low as 600,000 in South Australia. In WA, where I’m at the moment, is 850,000. So it’s something to be aware of. And then the tax rate is an average of 5 to 6%, but again varies greatly across the states. With working in multiple states, you need to be a way that if you breached thresholds, you must pay your tax on wages.

So if you work across multiple states, all wages somewhere need to be accounted in. There are four rules as to establishing which state you fall under. So it’s the employee’s principal place of residence, employers registered ABN address or principal place of business, the place where the wages are paid to the employee and the place where the services are mainly performance. So obviously payroll tax in itself is a fairly complicated tax and if you’re working in multiple states, it adds to that complication. And then to wrap us off, Toni’s just going to talk about being aware of certain things within payroll tax.

Toni:

Yeah. So with payroll tax, I guess it’s a text that you need to be aware of as your business is growing. So as you start to employ more staff, you just need to be weary of whether you are going to breach one of these thresholds and need to start reporting. And then it’s just going to be a particularly important thing to be thinking about when you’re operating across multiple states and just getting some good advice as to what staff are going to be captured under what state, because there may be multiple states that you’re needing to be reporting and just knowing sort of correct reporting will just save you headaches down the road. And that’s it. That’s payroll tax to start.

Storm:

Definitely. Just a nutshell to keep you aware. Keep your eye on those thresholds, keep your accountant involved in your affairs, be aware that if you breach those monthly caps, you need to stop paying payroll tax. And that’s it from us. So payroll tax very brief, it’s actually very complex, so just be aware of those thresholds.

Toni:

Thank you.