Payroll Tax Western Australia

This is general information and not advice. For more complete information go to the WA Department of Finance.

[update 31 October 2019] The Treasurer has announced payroll tax relief measures which include

  • lifting the payroll tax threshold from 1 January 2020 to $950,000; and
  • to $1 million from 1 January 2021.

Budget 2019

The State Budget for 2019/20 has announced the termination of the payroll tax exemption for new worker trainees earning up to $100,000 from 1 July 2019. See further: State Budget 2019-20

Budget 2017

The State Budget 2017-18 announced increases in the payroll tax rate for large employers from 1 July 2018 – see ‘Payroll Tax Rate’ details below.

Budget 2016

State Budget 2016-17  12 May 2016: Confirmed the previous announcement that payroll tax threshold will move to $850,000 from 1 July 2016. See 2016-17 Budget Paper page 293

Budget 2015

From the State Budget 2015-16 14 May 2015: The original timing of an increase in the payroll tax threshold to $850,000 from 1 July 2016 will proceed. Source: Budget paper No.3 page 93

Treasurer’s Mid-Year Review 22 December 2014

Announcements in the Treasurer’s mid-year review include proposals to:

  • delay the increase in threshold to $850,000 by one year from 1 July 2016 to 1 July 2017 * (* see later Budget 14 May 2015 – this proposed measure was reversed)
  • from 1 July 2015
    • gradual withdrawal of exemption threshold for payrolls between $800,000 and $7.5 million
    • nil exemption for annual payrolls above $7.5 million

Payroll Tax Rate in Western Australia

From the 2013-14 financial year onwards the general payroll tax rate is 5.5% of the taxable wages amount (for payrolls up to $100 million per annum). From 1 July 2018 larger payrolls attract higher rates.

For larger businesses: Measures contained in the State Budget 2017-18 announcement implement a ‘temporary’ increase in the payroll tax rate for large businesses for a period of 5 years from 1 July 2018 to 30 June 2023.

The new rates will be:

  •  6% for employers with a payroll over $100 million; and
  •  6.5% for employers with a payroll over $1.5 billion.

Here’s a summary of how the new rates will apply.

(Details of amending legislation are here).

Source: WA Dept of Finance

Payroll Tax Threshold in Western Australia

From 1 July 2015 a $7.5 million upper threshold is created, over which there is no tax-free allowance and tax is paid on the total payroll value.

For payrolls between the lower and upper thresholds, the tax free (deductible) amount is calculated according to the formula:

AT-[(W-AT)  x (AT/UT-AT)]

– where AT = the annual threshold, W = the taxable wages and UV = the upper threshold. Apportionment of the formula applies to part-year situations.

See also: Calculation of payroll tax

  • From 1 July 2016 the Western Australian payroll tax annual threshold moves to $850,000 per annum
  • From 1 July 2014 to 30 June 2016 the Western Australian payroll tax annual threshold is $800,000 per annum.
  • The payroll tax annual threshold for the 2013-14 financial year was $750,000.

For monthly returns and the necessary monthly tax calculations, the annual deduction is divided by 12 to provide a monthly deduction amount.

Exemption For Wages Of Employees With A Disability

Wages paid to new employees with a disability from 1 July 2012, whose wages are subsidised under the Commonwealth Government’s Disability Employment Services program, or eligible for WA Disability Services Commission support are exempt from payroll tax.

Indigenous Employees Payroll Tax Rebate

– a full rebate of pay-roll tax for businesses with annual Australia-wide wages of up to $15 million for wages paid to new indigenous employees, from 1 July 2012, for two years.

The rebate is paid after completion of the annual 2012-13 financial year reconciliation, from September 2013. For further information see Circular 8

Due dates

  • Monthly returns and payment are due seven days after the end of each month except June which is the 21st of July, or if a weekend or public holiday, the next business day.
  • An annual return and reconciliation is required by 21 July each year

For annual tax liabilities of less than $100,000, employers can optionally apply to lodge and pay on a quarterly basis.

  • Quarterly returns are due 7th October, January and April and 21 July.

December 2016 extension: The due date to lodge and pay the December 2016 payroll tax return has been extended to midnight Monday 16 January 2017.

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 (including certain salary sacrifice amounts) as defined under the Fringe Benefits Tax Assessment Act 1986.

The WA Department of Finance has produced a Fact Sheet detailing what are considered taxable wages, which also includes a list of items which are exempt. See: Pay-roll Tax -Wages Definition and also Fringe Benefits Guide

WA payroll tax exempt organisations

Exemptions are available (on application and approval) for :

  • Religious organisations
  • Hospitals
  • Schools
  • Government departments
  • Public Benevolent institutions
  • Charities

Application for exemptions are required to be submitted with a copy of the organisation’s constitution and details of its nature, aims and objects. See exemptions.

Payroll tax and contractors

This is a tricky and complicated area for the lay-person. Payments to contractors are taxable if legally an employee/employer relationship exists. The Department has provided some guidance on this matter here: Are payments to contractors liable?

There is also a Contractor Payments Questionnaire which provides a basis of self-assessment, and may optionally be submitted to the State Revenue Office for a determination.

Grouping provisions

Entities are grouped for payroll tax 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 the following factors:

  • Related companies according to the Corporations Act definition
  • Use of common employees
  • Common control (more than 50%) from one or more persons
  • “tracing” – an entity has a direct, indirect or aggregate controlling interest in a corporation

There are some group exemptions available, the practice of which has been harmonised and is explained here. More detailed other information is available here: grouping provisions.

Registration

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

Employers with an actual or expected pay-roll tax liability of $100,000 per year or more, must lodge and pay online. For the Department’s Revenue Online registration and return lodgement service go here.

Rulings and Further Information – WA Payroll Tax

See:

 

This page was last modified 2019-11-04