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Does My Business Need to Pay Payroll Tax?
As a business owner in Australia, navigating the complex landscape of taxes and employer obligations can be challenging, and payroll tax is no different. Legislative changes in mid-2023 means it’s as important as ever to stay informed and compliant with payroll tax laws, and understanding it is key. This includes knowing if your business is subject to payroll tax, understanding the applicable thresholds, and knowing where to go for assistance. Let’s get into it…
What is Payroll Tax?
Payroll tax is a tax imposed by the state government, assessed on the taxable wages paid (or payable) by an employer in WA. As it is a self-assessed tax, onus is on the employer to ensure that any information provided is correct, and that they comply with their tax obligations. Payroll tax is paid into the Consolidated Fund of Western Australia to meet the costs of public services such as education, health, public safety, and law and order. As with other taxes, the state government reserves the right to apply penalty tax, make an estimate assessment of your liability, and conduct an audit to verify your liability if you don’t register and lodge your returns as required.
How can you determine your Payroll Tax liability?
Currently, if your wage bill per month is less than $1,000,000 per annum (or less than $83,833 per month) then you will not be subject to Payroll Tax. The Payroll Tax Employer Guide is a useful resource, outlining all the relevant information that employers should be aware of. This includes guidance around exempt employers (e.g. religious organisations; schools below tertiary level; some government departments; certain charitable organisations), and also information on what types of wages and payments are included under payroll tax.
What are the Payroll Tax Thresholds?
As of 1 July 2023, the payroll tax rate is 5.5% on the taxable wages paid by employers or groups of employers. A diminishing threshold applies for employers or groups of employers with annual taxable wages in Australia between $1 million and $7.5 million.
For example, if an employer pays monthly wages of $92,000, for the 2023-24 assessment year, their total wages of $1,104,000 exceed the annual taxable threshold. Payroll tax of $6,600 will apply during this period.
From 1 July 2023 – when monthly Australian taxable wages are more than $83,333.
| Annual Australian taxable wages | Tax rate | Calculation of tax payable |
|---|---|---|
| More than $1 million but less than $7.5 million | 5.5% | WA taxable wages - deductible amount x tax rate |
| $7.5 million or more | 5.5% | WA taxable wages x tax rate |
How MP+ Can Help
If you are unsure if you are liable for Payroll Tax, or would like some further information or advice, please don’t hesitate to contact the MP+ team via our website or call us on 08 9301 2200 (Joondalup) or 08 9325 2411 (Perth).
written by:
Claire Ginbey
Heading up our CFO2GO team, Claire's skills as a SME Business Specialist and cloud accounting specialist have developed in line with advancements in technology and best practice; allowing her to maintain the highest service standards for clients.
Claire's passion for growing small businesses and helping them achieve sustained success is what motivates her to continuously develop her skills and knowledge. Her clients appreciate her considered and dedicated approach to working with them, and her personal oversight across their operations and financial performance.
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