Payroll Tax Discounts for Regional EmployersGeneral News: 11/09/2017
As of the 1st July, 2017 Victorian Regional Employers will receive a discount to the amount of payroll tax they are charged.
Up until 30th June 2017 all employers paying wages over $575,000 would be charged 4.85% on every $1 over this threshold.
As part of State Budget changes Regional Employers will be given a discount on the 4.85% now dropping to 3.65%.
Also included in these changes are that the threshold for the current financial year has increased to $625,000 and will increase again to $650,000 on 1 July 2017.
To be eligible for this reduction in payroll tax you must satisfy the following:
- Be based in Regional Victoria noted in this list from the State Revenue Office website.
- Pay at least 85 per cent of your Victorian Taxable wages to regional* employees.
- *a regional employee is someone who performs their services (more than 50 per cent) in regional Victoria during the month.
To give an example of the savings by this reduction, if an employee was paying $750,000 in wages in the 2017 financial year, they would be paying $8,487.50 in payroll tax.
Compared to if they were paying the same wages in 2018 this would then be $4,562.50 at the rate of 3.65% also including the increased threshold. This is a saving of $3,925.
When calculating your wages to work out if you are over the threshold for payroll tax it is important to remember what I included and not included the calculation and also if you are grouped with another business you are involved in.
To give an example of what to include and what not to please see as follows:
Wages are defined under the Payroll Tax Act 2007 (the Act) and include:
- Employer (pre-tax) superannuation contributions such as:
- Fringe benefits within the meaning of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBT Act),
- The value of shares and options granted to employees, directors, former directors and some contractors,
- Payments to some contractors,
- Payments by employment agencies arising from employment agency contracts,
- Remuneration paid by a company to company directors, and
- Employment termination payments and accrued leave
Payments (considered wages) to employees engaged on a permanent, temporary or casual basis are always subject to payroll tax.
Some wages are exempt from payroll tax. These include, but are not limited to:
- Adoption and maternity leave,
- Paid parental leave,
- Contributions to redundancy benefit schemes,
- Wages paid to employees absent from work to volunteer as firefighters or respond to other emergencies,
- Wages paid to a person while on military leave as a member of the Defence Forces, and
- Bone fide redundancy or early retirement payments
For more information regarding payroll tax please contact Mulcahy & Co Tax Accountants Ballarat, to discuss your businesses situation.