In recent times the state revenue offices have increased their audit activities in the payroll tax area, particularly with respect to grouping and contractor payments.
For payroll tax purposes, businesses may be grouped with other businesses if there is a link between the companies as defined below. When a group exists:
• Only a single threshold deduction applies to the group
• Each member of the group is liable for any outstanding payroll tax of the other group members.
A group can be defined in the following ways:
Related companies
All corporations that meet the definition of related companies provided in the Corporations Act 2001 are grouped. Companies are taken to be related if two or more companies are:
• A holding company and a subsidiary
• Both subsidiaries of the same holding company
Any related companies paying Australian wages are grouped, even if they have a holding company located overseas. Trustee or nominee companies are not able to be grouped under this provision.
The related corporations grouping only apply to companies.
Use of common employees
Businesses are grouped when an agreement for services between two or more businesses results in the employees of one business performing duties as an employee for another business.
Commonly controlled businesses
Two businesses controlled by the same person or persons are grouped. All persons common to two businesses will have their interests combined. A ‘person’ means a natural personal, trustee or corporate entity.
Employers should take appropriate steps to be prepared for an audit by undertaking a review of their current Payroll tax processes and procedures. The lawyers and tax accountants at The Quinn Group have many years of experience helping our clients with payroll tax and assisting with payroll tax audits by the OSR. For more information, call us on 02 9223 9166 or submit an online enquiry here.
