Payroll Tax Changes in NSW – What You Need to Know
Are you a sole trader, partner or director that pays Payroll Tax? Here is what you need to know about new Payroll Tax requirements.
Does Payroll Tax apply to me?
If you run a business then it is likely that you need to consider Payroll tax as part of your expenses. Payroll Tax is a state tax on your employees’ wages. It is calculated as a percentage of the sum of the wages you pay your employees on a month-to-month basis. It is important to note, however, that this tax may not apply to you. In New South Wales, you are only liable to pay this tax if the total wages (annually) exceed the tax-free threshold – $850,000. Do you meet this criterion? Read on because there are new changes slated to take effect soon which may affect you.
In 2018, the Government announced a number of changes to the Payroll tax system. This has a positive impact on your tax administration process as well as your business cash flow and resource management.
Here are the changes that you need to know about:
Payroll Tax Administration
If you are a small business then from July 2019 you will be able to process these payments annually. This is contrary to the previous month-to-month payment system. If your payroll tax liability is less than $20,000 you can pay it yearly and receive one annual return.
Conversely, if your tax liability is below $150,000 then you can make annual tax submissions. Payment of the tax will be made on a monthly basis, calculated by your previous year’s owing amount. If you need further assistance in understanding your rights and responsibilities in relation to Payroll Tax a Business Lawyer can assist you throughout the entire process.
The good news is that with these changes you are expected to save around 16 hours of administration work per year. In turn, you can focus on other areas of your business, like your social media presence.
Since 1 July 2018, the government lifted the tax threshold from $750,000 to $850,000. This means that in addition to reducing the cost of administering your Payroll, you will also have to pay less tax on a yearly basis. For information on how to calculate your annual Payroll Tax click here.
If you stop employing staff in NSW during the financial year, then you are not entitled to the full threshold. Instead, you will be given a portion of the threshold, calculated based on the number of days in the year that you employed against 365 days.
Youstina is an intern at Lawpath as part of the Content Team. She is a final year Law and Social Science student (majoring in development and culture) at Macquarie University. She is interested in legal technology and policy development.