Tax tips, tax, payroll tax, bookkeeper, ato, startups, small business,What is payroll tax?

Often business owners get confused with payroll tax and PAYG Withholding Tax. Whilst they are both paid by employers and related to the staff they employ, they are two completely different taxes.

What is the difference between PAYG Withholding and Payroll tax?

PAYG Withholding is a tax on staff wages. It applies to businesses of all sizes, regardless of whether you have one staff member or 1,000 staff members. For more information, refer here.

On the other hand, Payroll Tax generally only applies to larger sized-small businesses and beyond. It is applicable to businesses whose total wage bill exceeds a threshold amount (known as the payroll tax wages threshold). The threshold is different for each of the states in Australia.

What is the threshold for Payroll tax?

Payroll tax is only applicable once your business expects to reach the annual wages thresholds below

State Wages Threshold (per annum) Rate (%)
ACT $1,850,000 6.85
NSW $750,000 5.45
VIC $550,000 4.80
TAS $1,250,000 6.10
QLD $1,100,000 4.75
NT $1,500,000 5.50
SA $600,000 4.95
WA $800,000 5.50

When do you need to pay it?

Payroll tax is paid annually (for small payers) or monthly. If you are paying each month, the payment is due within 7 days after the end of the current month. If you are paying your payroll tax annually, then your reconciliation and payment is due by 21st July.

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