Payroll Tax NSW

This is general information and not advice. For more complete information go to the NSW Office of State Revenue.

News 22 Nov 2018 The NSW State Treasurer has announced a streamlining of payroll tax reporting and payment from 1 July 2019. The measures form part of the Government’s response to recommendations of the NSW Productivity Commission’s Review of Payroll Tax Administration.

The Review recommended a 3-tier compliance model based on a business’s quantum of annual payroll tax liability.

TierBusiness annual payroll liabilityObligationReconciliation (currently 21 July)
Oneup to $20,000annual payment, lodgementAnnual 28 July
Twoover $20,000 to $150,000monthly payment of a fixed amount, based on previous year’s payroll tax liability (with a 3% uplift)Annual 28 July
Threeabove $150,000monthly payment, based on monthly lodgementsAnnual 28 July

Update 19 June 2018: The NSW State Budget 2018-19 has a proposal to progressively lift the payroll tax threshold from $750,000 to $1 million by 2021-22.

The thresholds will be:

  • 2018-19 $850,000
  • 2019-20 $900,000
  • 2020-21 $950,000
  • 2021-22 $1,000,000

Update 21 June 2016: The NSW State Budget 2016-17 contains no changes to the basic payroll tax settings. However from 31 July 2016, the Jobs Action Plan payroll tax rebate will be increased from $5,000 to $6,000 (comprising $2,000 payable after 1 year and $4,000 after 2 years) and limited to businesses with 50 or less full-time equivalent staff .

Update 23 June 2015: The NSW State Budget 2015-16 contains no changes to the basic payroll tax settings.

  • The Jobs Action Plan scheme which now provides a $5,000 payroll tax rebate to businesses that employ new workers has been extended to 30 June 2019.
  • from 1 July 2015 a Small Business Employment Incentive Scheme is to provide a grant of up to $2,000 to businesses in New South Wales with wages below the current payroll tax threshold of $750,000 for hiring new employees.

Update 17 June 2014: NSW State Budget 2014-15 contains no changes to the basic payroll tax settings for the 2014-15 year, and has confirmed the continuation of support for the Jobs Action Plan (see below).  See Budget 2014-15.

Payroll Tax Rate in NSW

– the current payroll tax rate is 5.45% of taxable wages

Payroll Tax Threshold in NSW

The current payroll tax annual threshold is $750,000.

As announced in the 2018-19 State Budget, from 1 July 2018 until 1 July 2021 the threshold will be progressively lifted to $1,000,000. The thresholds will be:

  • 2017-18 $750,000
  • 2018-19 $850,000
  • 2019-20 $900,000
  • 2020-21 $950,000
  • 2021-22 $1,000,000

The threshold amount is deducted from annual wages to determine the actual payroll tax liability for the year. This calculated liability is then compared to the total of monthly returns, resulting in either a balance to pay, or a refund due.

The annual deduction is reduced proportionately by any periods in which the employer does not have a NSW payroll.

Monthly thresholds

For monthly returns and the necessary monthly tax calculations, the annual deduction is converted to a monthly deduction by apportioning it to the actual number of days in the month.

e.g. for a 28-day month the deduction is $750,000 ÷ 365 x 28 = $57,534

Due dates

The due date for the December 2017 payment has been extended to Monday, 15 January 2018.

  • Monthly returns and payment are due seven days after the end of each month except June, or if a weekend or public holiday, the next business day.
  • Quarterly returns and payment are due by 7th October, January and April and 21 July.
  • An annual return and reconciliation is required by 21 July each year. See annual reconciliation information.

Definition of wages and exemptions

The payroll tax base include wages and salaries, the definition of which is expanded to include a range of contractor payments, allowances and fringe benefits as they are defined under the Fringe Benefits Tax Assessment Act 1986.

Included are payments to third parties for services provided by and employee (or director) to an employer.

There are also a number of exemptions and exclusions. Exemptions may be based on the status of the employer, or the nature of the work.

See further: What payments are liable for payroll tax (and what are not)?

Payroll tax and contractors

When are contractor payments not subject to payroll tax? Read the criteria.

Grouping provisions

Payroll values of grouped entities are added together for taxing purposes so that the deductible threshold is only available once within groups of related parties.

Relationships (and hence aggregation of payroll amounts) are determined on the basis of 5 possible factors:

  • Related companies according to the Corporations Act definition
  • Use of common employees
  • Common control (more than 50%) from one or more director, shareholder, partner or beneficiaries of a trust
  • Tracing of more than 50% direct or indirect interests in any corporation
  • Subsuming – simultaneously a member of 2 or more groups, or members of a group with a controlling interest in another business

There are some group exemptions available.

See further: Grouping

NSW Payroll Tax Registration

Registration for payroll tax is required within seven days after the month in which your total Australian wages first exceed the current NSW monthly threshold.

The online registration information is here.

Jobs Action Plan Payroll Tax Rebate Scheme

– is an incentive scheme designed to encourage employment in NSW.

A Budget 2016-17 measure increases the rebate from $5,000 to $6,000 from 31 July 2016. The Jobs Action Plan payroll tax rebate is available to businesses with 50 or less full-time equivalent staff.

As announced in the 2015-16 Budget the Jobs Action Plan scheme has been extended until 30 June 2019, with an application cut-off date of 30 September 2019. See also Revenue Ruling No. JAP 001.

Fresh Start program – to 30 June 2015

The Jobs Action Plan (Fresh Start Support) Scheme builds on the Jobs Action Plan by providing an additional payroll tax rebate to businesses that employ workers who have recently been made unemployed through large scale redundancies.

Employers hiring a redundant worker from a designated employer will receive an additional $1,000 payroll tax rebate, in addition to the existing $5,000 rebate, where the worker is made redundant between 1 January 2014 and 30 June 2015. A designated employer is a business that has made a significant number of redundancies that has an impact on an industry or a region.

Information – see Fresh start support and Jobs Action Plan

Rulings

For further detailed information, please see the schedule of OSR Payroll Tax Revenue Rulings

Other information – see Client education

 

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This page was last modified 2018-11-23