From 1 July 2019, payroll tax is payable in Queensland when the total annual Australian taxable wages of an employer or group of employers exceeds $1.3 million (previously $1.1 million). Broadly, taxable wages includes all cash and non-cash wages, third party payments and salary sacrificed amounts paid to employees as a reward for services rendered. There are also contractor provisions which assign payments to certain contractors to be wages for payroll tax purposes.
Payroll tax is a self-assessed state and territory based tax imposed on employers where total wages exceed the relevant threshold. Whilst there has been some legislative harmonisation between the states in a number of key areas, differences still exist. As such, the following discussion of payroll tax is based on the Queensland Payroll Tax system only.
Registration for payroll tax is required in Queensland when:
- You pay Queensland taxable wages; and
- Your Australian taxable wages (or your group wages) exceed $25,000 a week.
This registration is required whether or not you think your annual Australian taxable wages will exceed the $1.3m threshold.
When considering the requirement to register for payroll tax, the payroll tax grouping provisions are an important but often overlooked consideration. A group will exist for payroll tax purposes if at least one of the following conditions are satisfied:
- Corporations are related bodies corporate (i.e. in a holding/subsidiary relationship)
- Employees are used in more than one business
- The same person, or set of persons, has a controlling interest in two or more businesses
- An entity has a tracing interest in corporations
- A person is part of two or more groups
Only one of the above conditions is required to be satisfied in order for employers to be grouped. An application can be submitted for an employer/business to be excluded from a payroll tax group, however this is only available in limited circumstances.
A payroll tax group’s taxable amount is calculated based on the combined Australian taxable wages of all employers/businesses within the group. Each member of the group will be liable for any payroll tax liability of other members within the group. A designated group employer can be nominated by the group, or the Commissioner of State Revenue where no nomination has been made, who is responsible for lodgement of the annual return each year. If the group is eligible for any payroll tax deduction, it is usually the nominated entity which claims this amount.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.