Payroll Tax Reduction for Small Businesses

Payroll Tax Reduction 1 January 2019

Please note that legislative amendments which reduce payroll tax for small businesses will come into effect from 1 January 2019, with businesses with an annual taxable wage of up to $1.5 million no longer liable for payroll tax. Those with taxable wages between $1.5m and $1.7m will benefit from a reduced payroll tax rate.

As these changes come into effect mid-financial year, the 2018-19 financial year will be split into two return periods:

• Period 1: 1 July 2018 to 31 December 2018
• Period 2: 1 January 2019 to 30 June 2019

What Do You Need To Know?

If you are an Employer with estimated wages of under $1.5 million for 2018-19 from 1 July 2019, you will no longer be required to pay payroll tax in South Australia if your Australia-wide wages, or group wages, continue to remain below $1.5 million.

Will I Need To Continue To Lodge Monthly Returns?

As payroll tax is based on your annual taxable wages, you will need to remain registered for the 2018-19 financial year. If you have advised RevenueSA that your estimated Australia-wide wages, or group wages, for the 2018-19 financial year are under $1.5m, RevenueSA will convert you to an annual cycle so you will not be required to lodge monthly returns for the January 2019 to May 2019 periods.

When Can I Lodge My 2018-19 Annual Reconciliation?

You will need to complete the 2018-19 Annual Reconciliation by 22 July 2019. An email will be sent to you once the Annual Reconciliation opens in mid-June.

When Can I Cancel My Registration?

If you expect your 2019-20 financial year Australia-wide wages, or group wages, to remain under $1.5m, you should cancel your registration as part of the 2018-19 Annual Reconciliation. If you cease employing in South Australia before 30 June 2019, please contact RevenueSA
Employers with estimated wages between $1.5 million and $1.7 million for 2018-19

Will The Rate Change For My Monthly Returns?

You will continue to lodge your monthly returns using your current deduction entitlement (now called the ‘exempt amount’). The rate of tax you pay will be automatically calculated when you complete and lodge your returns.

The rate at which payroll tax is applied will depend on your estimated annual wages (for Period 2 between 0 per cent and 4.95 per cent). This will be automatically calculated through the online return process and a calculator will be available by mid-December this year to calculate your new rate.

Will Both Periods Be Calculated In My 2018-19 Annual Reconciliation?

When you complete your 2018-19 Annual Reconciliation you will need to provide your, or your group’s, total South Australian and Australia-wide wages for the year, together with a split of wages for the two periods (as specified above). Payroll tax payable and the deduction/exempt amount will be calculated based on the proportion of your wages paid in each period.

Employers With Wages Over $1.7m For 2018-19

There is no change. You will continue to lodge your monthly and annual reconciliations returns using your current deduction entitlement (up to $600,000 p.a.).

Please call your Advisor today if you have any further queries.

Important: Clients should not act solely on the basis of the material contained above. Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This is issued as a helpful guide to clients and for private information. If you need any clarification or direct advice please call us and make an appointment with an Adviser.