Payroll Tax 2017 – Annual Reconciliation Due Date Fast Approaching
The due date for the payroll tax annual reconciliation for the year ended 30 June 2017 is fast approaching – 21 July 2017.
Below is a list of review points that may assist your clients in completing their payroll tax annual reconciliation. The review points are designed to raise questions in areas where employers may overlook when determining their payroll tax liability.
Please contact Shane Peters or Anne Darmann at ITC Group if you would like to discuss these matters further.
| Review points | Suggested Action |
| Fringe Benefits: For NSW payroll tax purposes, the type 2 rate (currently 1.8868) is used to calculate the taxable value of fringe benefits of both types for the 2017 annual payroll tax reconciliation. Have you used the lower FBT gross up rate in your annual reconciliation? | Revise your payroll tax liability for the entire 2017 year by using the lower FBT gross up rate. |
| If you have used the default proportionate approach to allocate payroll tax liability (between states) on fringe benefits, have you considered you may be better off using the actual method if you have more taxable benefits in low rate states? | Review your fringe benefits allocation by state. |
| Exempt Payments: Are you aware of any deductions that may be available for workers compensation payments, paid parental leave payments, and for emergency services volunteer work? | Review these payments and deduct any components that do not constitute wages for payroll tax purposes. |
| Have you deducted all exempt wages and claimed eligible rebates? | Review wages and allowances for common exempt or rebate categories such as kilometre-based motor vehicle allowances, accommodation allowances (to prescribed amounts), maternity and adoption leave (paternity leave in NSW and some other states), trainees’ and apprentices’ wages, etc. |
| Are there any non-taxable elements in the Employment Termination Payments (ETPs)? | Identify all payments made to terminated employees, whether or not they were paid through payroll. Contact ITC Group if there are payments related to restraints of trade, voluntary redundancies or settlements of disputes. |
| Have you deducted the non-labour component from your contactors’ payments? | The OSR has listed a number of default non-labour percentages for common trades and professions. If you wish to deduct non-labour components that are outside of the OSR list you should seek a private ruling. |
| Employee Share Schemes: Have you properly determined the taxing points and taxable values of options and shares? Have you included any options or shares that issued in a prior year but vest during the current year? | The taxation of Employee Share Schemes (ESS) is highly complex. If in doubt, please contact ITC Group to discuss. |
| Super Contributions: Have you included all salary-sacrifice superannuation contributions in your payroll tax calculations? | Review all super contributions and include all salary-sacrifice contributions exceeding the 9.5% super guarantee |
| Directors Fees: Have you included all payments paid or payable by way of remuneration for the director’s appointment or services to the company? | Ascertain whether there were any payments to directors in addition to their directors’ fees or salaries, including payments made to directors’ associated entities. |
| Grouping: Have you considered whether your business is grouped with any other business for payroll tax purposes? If you are currently grouped, have you considered whether you are eligible to be de-grouped under the grouping exclusion provisions (restrictions apply, including that the businesses must be carried on substantially independently of each other)? |
Businesses are commonly grouped due to having common shareholders, directors or trust beneficiaries; or having shared employees. If in doubt, please contact ITC Group to discuss. |
| Contractors: If you engaged contractors in the 2017 year, have you considered whether any contractors’ payments are deemed to be wages for payroll tax purposes? Have you considered whether any sole trader ‘contractors’ are actually common law employees (using common law tests) rather than contractors? | Payments to independent contractors are subject to payroll tax unless they meet one of the exclusions applicable in the relevant state. If sole trader ‘contractors’ are actually common law employees, the payments to them will be subject to payroll tax. |
| If you place contractors to work for your clients and are not currently paying payroll tax as an employment agent, have you sought payroll tax advice on the likelihood that you may be treated as an employment agent for payroll tax purposes in light of recent tribunal and court cases? | Recent case decisions regarding employment agent provisions has created uncertainty in this area. If in doubt please contact ITC Group for a discussion. |
You may also wish to read our July 2016 newsletter on our website for more general discussion about payroll tax.
DISCLAIMER: This newsletter is issued as a helpful guide. It is not intended to, and does not cover all aspects of the topics discussed. Professional advice should be sought before any action upon these topics is taken.