Payroll tax is a monthly tax that must be paid by employers who pay wages to their employees. It is administered by the state and territory revenue offices. Payroll tax is only payable if the wages exceed the threshold amount set in the particular state or territory. It is calculated by multiplying the total wages paid or payable to employees for the month by the payroll tax rate. Each state and territory has a set payroll tax rate.

Payroll tax runs on a ‘self-assessment’ system. This means that businesses must assess their own payroll tax liability including doing the calculations. Businesses must then lodge monthly returns and an annual reconciliation. The revenue office may disagree with the business’ assessment. This is an area where legal review of the revenue office’s decision comes into play. Lawyers can advise you on how to object to a decision internally. Disagreements with the revenue office can also be taken to tribunals and courts. Payroll tax disputes can concern large amounts of money as disputed amounts may include penalties and interest in addition to the actual payroll tax liability.

Since 2007 the states and territories have taken a harmonised approach to payroll tax legislation. The legislation in the states and territories was amended so that the way payroll tax is dealt with in each state and territory is largely identical. However some differences remain such as the variation in payroll tax rates and deduction thresholds between states and territories. The state and territory revenue offices are committed to working together towards making a consistent scheme. For example the offices will often consult each other when making tax rulings.

This Legal Guide on Payroll Tax provides employers with information about whether they are liable for payroll tax and how much is payable. Before making important decisions it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.

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Warning: Information provided through LegalEagle™ is for general guidance. It is not legal advice. Laws and procedures referred to may change and differ between states, territories and nationally. There may also be important exceptions or qualifications. Only a lawyer providing formal legal advice can assess your particular circumstances to determine how the law will apply.