With the new state budgets each year comes the potential for changes to payroll tax rates. This year both Victoria and South Australia seized the opportunity to introduce significant changes to not just the rates, but the calculations as well.
From 1 July 2017, Victoria increased the annual payroll tax threshold from $575,000 to $625,000 ($52,083 per month), as well as introducing a new ‘regional’ clause. For some employers this will mean that they will now be calculating their payroll tax at a lesser rate.
The applicable payroll tax rate for regional employers from 1 July 2017 is now 3.65%. For all other Victorian employers, the rate will remain at 4.85%.
To qualify for the reduced payroll tax rate, the employer must be based in regional Victoria, pay at least 85% of their Victorian taxable wages to regional employees and either:
- Have an ABN and the ABN registered business address is located in regional Victoria, or
- Not have an ABN and the principal place of business is located in regional Victoria.
Regional Victoria is classed as all six alpine resorts, plus a further 48 specified municipal councils. You can find the full list of regional municipal councils here.
To qualify for ‘the 85 per cent rule’, and thereby the lesser payroll tax rate, the employer must pay:
- At least 85 per cent of the monthly Victorian taxable wages to regional employees for the purposes of monthly returns, and
- At least 85 per cent of the Victorian payroll to regional employees during a financial year for the purposes of annual return.
From 1st of July 2017, the applicable payroll tax rate in South Australia will now be determined according to a sliding scale dependant on the total Australian group wages for the financial year. The rate will be determined as follows:
- < $600,000 – the employer will not be liable for payroll tax
- $600,000 to $1mil – the payroll tax rate will be 2.5%
- $1mil to $1.5mil – the rate will vary between 2.5% – 4.95%
- $1.5mil+ – the payroll tax rate will be 4.95%
If your total Australian group wages will fall into the $1 – $1.5 million bracket, you can work out the exact rate that will apply by using the calculator on this page.
As for the applicable deduction threshold, it will be shown each month when you log into the RevenueSA website to lodge your payroll tax. The threshold will be calculated according to the annual estimated South Australian and national group wage for the financial year, to a maximum of $50,000 per month.
If this all seems just a bit too confusing, let the APA team take some of the stress out of it. We are here to help answer all of your payroll tax questions (and any other payroll questions you may have!). More information on what annual membership with Australian Payroll Association can do for you is available here.
If you’d like to be kept up with information like this relating to payroll, join Australian Payroll Association and never have to worry about not having information at your fingertips again.