Understanding Payroll Tax

If you have a business and pay people to work for you, you must be well across payroll tax.

Payroll tax is a state-level tax levied on wages paid by employers to their employees or deemed employees. In South Australia, it is governed by the Payroll Tax Act 2009 and the Taxation Administration Act 1996. Here’s what you need to know about payroll tax in South Australia:

Registration requirements

Employers must register for payroll tax when their Australian-wide taxable wages exceed the South Australian threshold, and wages are paid in South Australia. If an employer is part of a group of employers and the group’s Australian taxable wages surpass the South Australian threshold, registration is mandatory, regardless of the wage level of the particular group member. Getting an accountant to help you can help remove tax anxiety.

Calculation of payroll tax

payroll tax

The payroll tax rate in South Australia is determined based on the Australian-wide annual wages or group wages paid before deduction entitlements are subtracted. It is calculated on the total wages paid each month, with the state collecting the tax where the employees are located.

Thresholds and rates

The payroll tax rate in South Australia ranges from 0% to 4.95%. The threshold for annual taxable wages is $1,500,000, with a maximum annual deduction entitlement of $600,000. It’s essential to note that thresholds and rates vary between states and territories.

For the threshold in other states, check out the information here.

If you’re unsure, you can use this online calculator:

Registration and lodgement

Employers can register for payroll tax through the relevant state revenue office (in South Australia, it’s Revenue SA) and must lodge returns on a periodic basis, either monthly or annually, as determined by the Commissioner. Additionally, employers perform an Annual Reconciliation at the end of each financial year to ensure the correct liability has been paid. This is an opportunity to correct any over- or underpayments. You can complete this reconciliation online via Revenue SA (if you’re in South Australia).

If you’re unsure how to undertake your Annual Reconciliation, we’ll gladly assist.

Understanding payroll tax is crucial for businesses operating in South Australia to ensure compliance with state tax regulations. By familiarising yourself with the registration requirements, calculation methods, and applicable thresholds and rates, you can effectively manage your tax obligations and avoid potential penalties.

For more information on payroll tax in South Australia, including registration procedures and lodgement requirements, connect with us today.

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