Focus on Bi-Annual Payroll Tax Lodgments

Article by: Jay Rajapakse, Advivo Accountant and Payroll Specialist

Payroll tax is a tax assessed by the various states and territories on the wages paid or payable by an employer. Payroll tax is payable when the total ‘taxable’ wages exceed a particular threshold amount imposed by each state and territory. The rate of tax, and the threshold amounts over which payroll tax is payable vary between states and territories. As an example, the 2017 annual payroll tax exemption threshold for Queensland is $1.1 million and the tax rate is 4.75%.  The exemption threshold reduces by $0.25 in the dollar for every dollar of taxable wages paid over that threshold.

For a list of threshold amounts and rates applicable to the various states – Click Here

Payroll tax lodgments can be due either monthly, bi-annually or annually dependent on the amount of tax payable.  Those payroll taxpayers with a total tax payable of less than $20,000 are eligible to lodge on a bi-annual basis (6mthly), which we will focus on for the purpose of this blog.

The two periods for which to lodge on a bi-annual basis are July to December and January to June.  Importantly, the due date for the upcoming July to December lodgement is 16 January 2017.  This means you may need to prioritise it after returning from Christmas.

Calculating Your Bi-annual Payroll Tax Liability – Queensland

OSRconnect (Platform for online lodgments in QLD) will automatically calculate the payroll tax liability once you enter the taxable wages data for the six months. However, there are several points to note when entering data for a bi-annual lodgment.  The deduction amount to be calculated can vary depending on whether your entity is part of a group for payroll tax purposes or not.  It can also vary if you have interstate employees.  The payroll tax grouping rules are extremely wide-ranging so it’s important you consider all entities that may be ‘connected’ with the lodging entity to ensure taxable wages are being reported correctly.

Finally, as payroll tax is collected by the relevant state or territory authorities (Office of State Revenue in QLD), if you have employees working interstate, it may be the case that your entity would be required to register for payroll tax in multiple states.

In short, payroll tax can be a minefield for the uninitiated.  If you’re unsure of your obligations, or have any queries with respect to lodging or minimising payroll tax, please speak to us for tailored advice specific to your situation.