As a business owner in Australia, navigating various taxation obligations is crucial, including state-based payroll tax. Each state and territory has distinct payroll tax legislation, rates, and thresholds. Here, we’ll delve into the key aspects to help you better understand NSW Payroll Tax.
NSW Payroll Tax Overview
In NSW, payroll tax is regulated and collected by Revenue NSW, not the Australian Tax Office (ATO). For the 2024/25 financial year, the payroll tax rate remains at 5.45%, with an annual threshold of $1,200,000 in taxable wages.
Registration Requirements
Payroll tax is administered monthly. Employers who pay wages in NSW and exceed the monthly tax-free threshold must register with Revenue NSW and pay payroll tax by the 7th day after each month ends. The monthly threshold is calculated as follows:
The 2024-25 monthly thresholds for NSW are as follows:
- 28 day month= $92,055
- 30 day month= $98,630
- 31 day month= $101,918
If your annual taxable wages surpass $1,200,000 for the year ending 30 June 2024, you must register and pay payroll tax by the annual reconciliation deadline of 29 July 2024 (extended from 28 July 2024, as it falls on a Sunday).
Eligibility for the Full Annual Threshold
The full annual threshold applies to employers who:
- Employ for a full financial year
- Do not pay wages outside NSW
- Are not grouped with other businesses
Your business’ entitlement to the full threshold may be reduced if:
- You start or stop employing in NSW within a financial year
- You pay wages in another State or Territory
- Your business is part of a group of businesses
Liable Payments for NSW Payroll Tax
Payroll tax is imposed on an employer’s liable NSW wages after adjusting for any applicable threshold. Wages include various forms of remuneration, and payments to certain contractors may also be deemed wages. It’s essential to determine whether a contractor is considered an employee for payroll tax purposes. If not, those payments may be eligible for a payroll tax exemption.
For payroll tax purposes in NSW, taxable wages includes:
- Wages and salaries
- Allowances, bonuses, and commissions
- Apprentice and trainee wages
- Director’s fees and other payments
- Fringe benefits
- Superannuation
- Termination payments
Some payments are exempt from payroll tax, including:
- Jury duty payments
- Maternity and paternity leave
- Wages paid to volunteers in emergency operations
- Workers compensation payments
- Trust distributions and dividends
NSW Payroll Tax Grouping Provisions
Businesses may be grouped with other businesses if there is a link between the entities, impacting threshold entitlements. Grouping can occur regardless of where the businesses operate.
Grouping definitions include:
- Related companies (holding and subsidiary companies)
- Use of common employees
- Commonly controlled businesses
- Tracing of interest (more than 50% interest in a corporation)
- Subsuming (multiple smaller groups forming a larger group)
Where a group exists:
- Threshold entitlement is based on the proportion of NSW wages against total Australian wages
- A single threshold deduction applies to the group
- Group members can use the designated group employer (DGE) or single lodger method for reporting
- Each group member is liable for any outstanding payroll tax of other group members
Payroll Tax Reporting & Compliance
Revenue NSW employs data analytics and risk assessments to identify non-compliant employers, conducting regular audits and exchanging information with other agencies, including the ATO, SafeWork NSW, ASIC, and the Rental Bond Board. Regularly reviewing your payroll tax processes ensures compliance and accuracy, mitigating potential audit concerns.
Lodge NSW Payroll Tax Annual Reconciliation
The due date for the 2023/24 annual payroll tax reconciliation is 28 July 2024. This reconciliation allows you to review, adjust, and correct any reporting or payment errors from the year. Timely and thorough reconciliation is vital to avoid penalties.
By staying informed and compliant with NSW payroll tax regulations, you can ensure smooth business operations and avoid potential pitfalls.
Seek Expert Advice for NSW Payroll Tax
Navigating NSW Payroll Tax doesn’t need to be overwhelming. With the right advice and guidance, you can be confident that you are meeting your payment and lodgement obligations while legally minimising the amount of tax you are liable to pay by correctly claiming any rebates or exemptions you may be eligible for.
If you have any questions regarding your NSW payroll tax obligations or need help lodging your annual reconciliation, contact the expert team of tax accountants at The Quinn Group by calling 1300 QUINNS (1300 784 667) or on +61 2 9223 9166, or submit an online enquiry form to arrange an appointment.
