Payroll taxes in New South Wales

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Employers, or a group of related businesses, whose total Australian wages exceed the current NSW monthly threshold, are required to pay NSW payroll tax. Broadly speaking, the tax amount is a percentage of taxable wages paid within NSW. This percentage is called the payroll tax rate.

Shareholders of more than one business need to be aware that OSR NSW launch around 500 grouping actions per annum.

A grouping action is where more than one of your businesses are 'deemed' to be effectively the same business for Payroll taxation purposes and thus 'grouped' together. These grouping actions are difficult to defend against without very deep pockets. They can result in heavy fines and back tax with high rates of interest. To reduce the possibility of a grouping action, it is worth considering outsourcing work to sub-contractors rather employing people directly or alternatively using overseas people with specific skillsets. In both cases, you will reduce the possibility of a grouping action.

For more information on grouping look here: http://www.osr.nsw.gov.au/taxes/payroll/grouping

The following table lists the payroll tax rate and annual threshold in force for the indicated dates. The monthly threshold is the appropriate fraction of the annual threshold according to how many days there are in the month.

Start Date End Date Payroll Tax Rate Annual Threshold
2007-07-01 2008-06-30 6% $600,000
2008-07-01 2008-12-31 6% $623,000
2009-01-01 2009-06-30 5.75% $623,000
2009-07-01 2009-12-31 5.75% $638,000
2010-01-01 2010-06-30 5.65% $638,000
2010-07-01 2010-12-31 5.5% $638,000
2011-01-01 2011-06-30? 5.45% $638,000

Each monthly payment or 'nil' remittance is due seven days after the end of each month or the next business day if the seventh day is a weekend (i.e., August payment is due by 7 September). The annual reconciliation and payment or 'nil' remittance is due by 21 July.

Effective July 2007 - In NSW, payroll tax is levied under the Payroll Tax Act 2007 and administered by the Taxation Administration Act 1996.

Prior to 1 July 2007 - In NSW, payroll tax was levied under the Pay-roll Tax Act 1971 and administered by the Taxation Administration Act 1996.

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