Payroll tax, while simple in concept, can prove tricky and often unexpected in certain circumstances.
Basically, payroll tax is a tax on wages paid, however the problem arises when determining how much to pay and to whom. This is because tax roll tax is a State regulated tax with each state having different regulations, rates and thresholds.
Luckily, not all employers have to pay payroll tax and with the wage thresholds being quite generous, an employer has to have significant wage expenses before the obligation arises.
In Queensland, the threshold for wages before payroll tax is applicable is $1,100,000, other states, however, are lower. The following table summarises the different state thresholds and payroll tax rates.
Generally, you will be required to register with the Office of State Revenue in the state where business in conducted. The payroll tax rates and thresholds will be applicable for that state.
However, if you employ staff who reside in a different state, and the total wage expense for all employees exceeds the threshold for either state, then there will be a payroll tax obligation in both states, even if neither state threshold is individually exceeded.
For example, if your wages expense for your Queensland employees totals $700,000 for the year, and you have employees who reside in New South Wales and their wages total $500,000, your total Australian wages expense is $1,200,000. Even though neither the Queensland nor the New South Wages wage thresholds are exceeded individually, the amalgamation of wages does exceed both thresholds. In this instance, registration for payroll tax would need to be obtained in both Queensland and New South Wales and monthly returns lodged in both states.