Company Grouping of Payroll Tax
Payroll tax is imposed by the Office of State Revenue (OSR) on an employer’s liable NSW wages minus any threshold entitlement. As the majority of entities employ staff, payroll is usually one of their largest expenses. It can be of either a weekly, fortnightly, or monthly nature. With regards to payroll, the employer must take out any PAYG withholding tax from the employees’ salaries/wages as applicable – this is submitted to the ATO.
An individual employer or a group of employers may be liable for Payroll Tax if their total taxable wages throughout Australia, including NSW, exceeds $658,000 for the 2010 – 11 Payroll Tax year and $678,000 for the 2011–12 Payroll Tax year. If their wage payment is lower than this threshold, they do not have to pay the tax. As soon as their total wages go above this amount, the full tax is applicable on the amount that exceeds the limit.
Employers should usually lodge their payroll tax returns on a monthly basis, and pay any tax they have outstanding to the appropriate taxation office within 7 days after the end of the month that the wages were paid in.
In all regions, except for WA, it is compulsory to complete and lodge a reconciliation between the payroll tax paid and payable at the conclusion of every financial year – 21st July (except for the Australian Capital Territpry: 31st July). It is at this stage that the tax refund/payable is calculated.
Businesses that are grouped for payroll tax can only claim one tax free threshold and are jointly and severally liable for any outstanding payroll tax. For Payroll Tax purposes, a group is constituted under the following circumstances:
• use of common employees
• commonly controlled businesses
• inter-company agreements and common financial arrangements
• groups arising from tracing of interests in corporations
• smaller groups subsumed by larger groups.
• trade between the businesses
• shared expenses and resources, including premises
• common customers between the businesses
The world of tax can be extremely complex and if obligations are not adhered to it can often become quite stressful, not to mention costly. The experienced team of accountants, lawyers and tax agents at The Quinn Group are able to assist you with all tax and ATO related matters. For advice or more information contact us now by submitting an online enquiry form or call 1300 QUINNS or on +61 2 9223 9166.