Payroll Tax Guide to Legislation 2020-21 - RevenueSA
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Payroll Tax
Guide to Legislation
2020-21
Payroll tax is a state tax calculated on
wages paid or payable and applies in
all states and territories. It is collected
and administered in accordance with
the Payroll Tax Act 2009 and Taxation
Administration Act 1996.
This Guide to Legislation provides a
general guide to payroll tax in South
Australia.
Payroll Tax Act 2009
Public - I3 - A2 Guides to Legislation do not have the force of law.
This document has been designed to be printed double sidedThis Guide to Legislation (“Guide”) provides a general guide for employer’s of their South Australian payroll
tax responsibilities under the Payroll Tax Act 2009 but it does not tute a Revenue Ruling.
If any uncertainty exists with a particular aspect of the information provided, please seek advice from
RevenueSA. The information provided in this Guide is correct at the time of publication.
In this Guide:
all references made to sections, parts, divisions, schedules or clauses relate to the Payroll Tax Act 2009,
unless otherwise specified;
a reference to the Commissioner is a reference to the Commissioner of State Taxation;
a reference to Australian jurisdictions includes all the states and territories of Australia; and
a reference to state(s) or interstate includes the Australian Capital Territory and the Northern Territory.
Julie Holmes
COMMISSIONER OF STATE TAXATION
23 July 2020
Further Information
Further information can be obtained from RevenueSA.
Website revenuesa.sa.gov.au Email payrolltax@sa.gov.au Telephone (08) 8226 3750
(select option 5)
Authorised copies of the Act can be purchased from the Service SA, 30 Currie Street, Adelaide.
Online versions of state legislation are available at the South Australian legislation website:
legislation.sa.gov.au
Payroll Tax: Guide to Legislation 2020-21
page 2Contents
What is payroll tax?........................................... 4 Goods & Services Tax (GST) .................................... 12
Introduction ................................................................ 4 Annual, sick & long service leave payments ......... 12
Revenue Rulings.......................................................... 4 Jury duty .................................................................... 12
RevenueSA Online...................................................... 4 Allowances ................................................................ 12
Resetting your RevenueSA Online password.......... 4 Motor vehicle allowances................................... 12
COVID-19............................................................. 4 Accommodation allowances.............................. 13
Waiver for employers with wages of $4 million Living away from home allowances.................. 13
or less (in 2018-19)...................................................... 4 Reimbursements....................................................... 13
Deferral for employers with wages above Termination payments ............................................ 13
$4 million (in 2018-19)................................................ 4 Accrued leave...................................................... 13
Basis of tax......................................................... 5 Employment termination payments................ 13
Who must register for payroll tax............................. 5 Fringe benefits .......................................................... 14
Cancelling of registration of an employer............... 5 Calculating the fringe benefit value.................. 14
What is a charity?........................................................ 5 Declaring fringe benefit value........................... 14
What is a public benevolent institution?.................. 5 Share & options ........................................................ 14
Other exempt employers........................................... 5 Superannuation contributions.......................... 15
Applying for an exemption........................................ 6 Contribution holidays............................................... 15
How do I apply for an exemption?............................ 6 Salary sacrifice arrangements................................. 15
What if the organisation’s circumstances Remuneration to directors or members of the governing
change?........................................................................ 6 body............................................................................ 16
Returns................................................................ 6 Contractors ............................................................... 16
Monthly returns.......................................................... 6 Employment agency contracts ............................... 17
Annual reconciliation ................................................. 6 Exempt wages and other non-liable
Modifying your annual reconciliation....................... 7 payments.......................................................... 17
Calculation of payroll tax ................................. 7 Workers compensation............................................ 17
Tax rates............................................................. 7 Redundancy payments............................................. 17
Which rate do I use?................................................... 7 Maternity & adoption leave .................................... 17
What is my deduction?............................................... 7 Defence force payment............................................ 18
Calculation of tax: employers and groups Volunteer emergency workers ............................... 18
who only pay wages in South Australia.................... 8 Community Development Program (CDP)............. 18
Calculation of tax: employers and groups that Construction Industry Long Service Leave
pay wages in South Australia and interstate .......... 8 Contributions ............................................................ 18
Payment of payroll tax ..................................... 9 Grouping of employers.................................... 18
Payroll Tax Electronic Payment Authority (EPA)...... 9 Joint and several liability of group members........ 19
Payroll Tax Electronic Funds Transfer (EFT)............. 9 Exclusion from a group............................................ 19
BPAY........................................................................... 10 Administration issues..................................... 19
Cheque....................................................................... 10 Duties of agents, trustees, liquidators etc. ........... 19
Standard Business Reporting (SBR)........................ 10 Liquidators ................................................................ 19
Wages subject to payroll tax.......................... 10 Update contact information ................................... 19
When are wages subject to payroll tax in South Interest for late payment of tax.............................. 19
Australia?.................................................................... 10 Penalty tax for late payment of tax........................ 20
Overseas employment....................................... 11 Record keeping ........................................................ 20
Employees working in another country
Audits & investigations................................... 20
for six months or less......................................... 11
Employees working in another country Objections & appeals....................................... 21
for more than six months.................................. 11 Lodgement of objections ........................................ 21
Services performed offshore............................. 11 Lodgement of appeals ............................................. 21
Shares and options............................................. 11 Overpayment of tax........................................ 21
Definition of wages .................................................. 11 Application for refund ............................................. 21
Indirect payments..................................................... 12 Power to offset a credit ........................................... 21
Wages & salaries....................................................... 12 Checklist of taxable items.............................. 22
Payroll Tax: Guide to Legislation 2020-21
page 3What is payroll tax? RevenueSA Online
RevenueSA Online is an Internet based system that
Introduction allows an easy, flexible and more effective way for
you to do business with RevenueSA.
Payroll tax is a state tax that is calculated on wages
paid or payable. Payroll tax is payable when an RevenueSA Online facilitates the online lodgement
employer’s (or group of employers’) total Australian and payment of monthly returns and the annual
wages exceeds the South Australian threshold. An reconciliation return. All payroll tax returns must be
employer’s Australian wages comprise its South lodged via RevenueSA Online.
Australian wages and all interstate wages. In South
For more details on the functions provided through
Australia, payroll tax is collected and administered in RevenueSA Online please visit revenuesa.sa.gov.au/
accordance with the Payroll Tax Act 2009 (the “Act”). RevenueSAOnline.
The Act must be read in conjunction with the
Resetting your RevenueSA Online
provisions of the Taxation Administration Act 1996 (the
“TAA”). password
The administrative provisions relating to If the password associated with a RevenueSA Online
assessments, reassessments, refunds, interest, login is forgotten, it can be reset automatically
penalty tax, objections, appeals and investigative through RevenueSA Online.
powers are incorporated in the TAA. This can be done by clicking the forgot your
South Australian wages are the wages liable to tax password? link on the RevenueSA Online login page.
under the Act. Interstate wages are taxable wages An email will be sent to you with a link to change your
in another jurisdiction under that jurisdiction’s password.
legislation. Generally, employers are required to If you experience any problems accessing RevenueSA
self-determine their liability on a monthly basis by Online with the new password please contact our
calculating the actual tax payable for each return RevSupport team on (08) 8226 3750, select option 3.
period and remit the tax due when the return is
lodged. Employers are then required to perform an
annual reconciliation at the end of the financial year COVID-19
to ensure the correct liability is paid.
The State Government introduced two COVID-19
RevenueSA in conjunction with other jurisdictions relief measures for payroll tax for the 2019-20 and
have sought legislative harmony across a number of 2020-21 financial years.
areas within the Act.
Waiver for employers with wages of $4 million
Payroll tax forms part of the general revenue of the or less.
State and is applied towards financing the costs of
the government including the provision of health Deferral for employers with wages above
services, education, police, community welfare $4 million.
services and other services for which no direct Wages are determined based on the Australian wide
charges are made. group wages declared in 2018-19.
Revenue Rulings Waiver for employers with wages
RevenueSA publishes Revenue Rulings designed to of $4 million or less (in 2018-19)
help employers meet their obligations under the
Act and provide RevenueSA with an effective way of If your business/business group had Australian
communicating decisions on the interpretation of (annualised grouped) taxable wages of $4 million
legislation. or less during the 2018-19 financial year, a waiver
of payroll tax payable for the March to August 2020
A significant number of payroll tax Revenue Rulings monthly returns is automatically applied.
have been developed covering a wide range of topics.
These can be accessed via our website at: Deferral for employers with
revenuesa.sa.gov.au wages above $4 million
In addition to legislative harmony, South Australia (in 2018-19)
and its counterparts are committed to greater If your business/business group had Australian
administrative consistency. As a result, South (annualised grouped) taxable wages above $4 million
Australia have harmonised a number of their during the 2018-19 financial year, and you have been
Revenue Rulings with those of other Australian adversely impacted by COVID-19, you can elect in
jurisdictions. RevenueSA Online to defer any payroll tax payable for
Payroll Tax: Guide to Legislation 2020-21
page 4the March to August 2020 monthly returns, including institution, and educational company or an
the 2019-20 annual reconciliation, until 7 October instrumentality of the State); and
2020 (payable with your September 2020 monthly
religious or public benevolent institutions.
return).
Wages must be paid to a person engaged exclusively
See our COVID-19 payroll tax relief page for more for work of a kind ordinarily performed in connection
information about the waiver and deferral available. with the charitable, religious or benevolent purpose
of the organisation. People engaged directly in the
Basis of tax primary work or in administrative or management
work which is predominately associated with the
organisation’s charitable or similar work are accepted
Who must register for payroll tax as being exclusively engaged in that work.
Employers with Australian wages of $1.5 million or
more are required to be registered in South Australia.
What is a charity?
To be recognised as a charity, an organisation must
Employers who pay wages in South Australia must
be non-profit, for the public benefit, and be for the:
register for payroll tax if their Australian weekly
wages exceed $28 846. relief of poverty or sickness or the needs of the
aged;
For simple administration, employers are
recommended to register if during any one month, advancement of education;
their total Australian wages exceed the monthly
advancement of religion; or
threshold of $125 000. If the employer is a member
of a group, the total Australian wages paid or payable other purposes beneficial to the community.
by all members of the group determines whether the
employer should register for payroll tax. What is a public benevolent institution?
To be classed as a public benevolent institution, an
Registrations are completed online and can be
organisation must be non-profit and set up, usually in
accessed from the payroll tax menu on
revenuesa.sa.gov.au
perpetuity, for the:
relief of sickness, suffering, distress, misfortune,
Employers must pay tax by the seventh (7th) day of
destitution or helplessness; or
the month following the month in which their wages
exceeded the threshold. Interest and penalty tax may benefit of members of a community or of a
be payable on any unpaid tax if an employer who is particular locality, who are suffering from a
liable for payroll tax fails to register. particular disadvantage.
See grouping of employers for more details. The institution must provide services without
discrimination to every member of that section of the
Cancelling of registration of an public for which the institution was created according
to its constitutional documents.
employer
Employers may cancel before the annual Other exempt employers
reconciliation return period only if they cease to public and non-profit private hospitals;
employ in South Australia. Employers who cease
employing in South Australia before 30 June 2021 non-profit schools or colleges for wages paid to
should contact RevenueSA: persons providing education at or below (but not
above) the secondary level of education;
payrolltax@sa.gov.au non-profit child care centres and kindergartens;
Details explaining how to enter the cancellation and councils, other than wages paid or payable in
complete the reconciliation are on connection with specified business activities such
revenuesa.sa.gov.au as the supply of electricity or gas, or in connection
If you require further assistance please email with water supply, sewerage, the conduct of
payrolltax@sa.gov.au abattoirs, of public markets, of parking stations, of
cemeteries, of crematoria, of hostels or of public
Exempt based employers transport;
Wages paid by certain employers are exempt from non-profit health services providers, where:
payroll tax as provided under Part 4 and Schedule 2. “Health services” means:
An exemption will generally apply to wages paid by
the following types of organisations: - a service designed to promote health;
non-profit organisations having as their sole or - any therapeutic or other service designed to
dominant purpose a charitable purpose (but cure, alleviate, or afford protection against,
not including a school, a college, an educational any mental or physical illness, abnormality or
disability;
Payroll Tax: Guide to Legislation 2020-21
page 5-
-
any paramedical or ambulance service;
the care of, or assistance to, sick or disabled
Returns
persons at their place of residence; or The two types of returns required are monthly
- a prescribed service; or returns and annual reconciliation returns.
a motion picture production company, being
wages paid or payable to a person who is involved Monthly returns
in the production of a feature film. The motion Every employer or deemed employer who is
picture production company needs to satisfy the registered or required by the Act to apply for
Treasurer that: registration must, within seven (7) days after the close
- the film will be produced wholly or substantially of each month, lodge with the Commissioner a return
within South Australia; together with the tax payable for the required return
period. RevenueSA will accept lodgement of returns
- the production of the film will involve or on the next business day where the 7th falls on a
result in the employment of South Australian weekend or public holiday.
residents; and
- the production of the film will result in A return must be lodged each month whether or
economic benefits to the State of South not tax is payable. Failure to do so will result in a
Australia. default assessment being issued. However, in special
circumstances, the Commissioner may extend the
The above list of exempt employers is not exhaustive. time within which returns must be lodged or may
If you require confirmation or clarification that your authorise the lodging of returns on an annual basis.
organisation is exempt from payroll tax, please
contact RevenueSA. See the Lodgement Dates page on
revenuesa.sa.gov.au for more details.
Applying for an exemption
Depending on your eligibility, you will:
How do I apply for an exemption?
receive a waiver of payroll tax payable for your July
To apply for an exemption from payroll tax, you must to August 2020 monthly returns.; or
submit an Application and provide:
have the option to defer payment of your payroll
your organisation’s Constitution and/or tax liability for your July and August 2020 return
Memorandum and Articles of Association or until 7 October 2020.
proof of incorporation under the Associations
Incorporation Act, including the organisation’s All monthly lodgements are completed through
rules. This must show the organisation’s objectives RevenueSA Online:
and non-profit status. All documentation must be
signed and dated and should support the date you revenuesaonline.sa.gov.au
are requesting the exemption to start The employer is required to calculate the tax payable
a copy of the organisation’s last audited annual and send the payment of tax to RevenueSA.
report; The Commissioner may, at any time by notice in
details of the day-to-day activities and services writing, require an employer to lodge further or more
provided by the organisation; detailed returns.
details of other jurisdictions where wages are paid; Annual reconciliation
and
Each financial year, all registered employers must
any other relevant information in support of your lodge an annual reconciliation return. The annual
application. reconciliation gives employers the opportunity to
review their tax paid for the financial year, make any
An Application is available on revenuesa.sa.gov.au
necessary adjustments to correct overpayments or
What if the organisation’s circumstances underpayments made during the year and confirm a
change? registered employer’s status.
You must tell us anytime there is a change to the Tax for the month of June will be incorporated
organisation’s governing rules, specifically the in the annual reconciliation return. The annual
organisation’s objects and/or non-profit status, to reconciliation should include details of taxable
confirm your exemption remains valid. These include wages, and the various components that make up
the organisation’s: these wages. Interstate wages (if applicable) are also
required.
Constitution;
rules;
memorandum/articles of association; and
organisation name.
Payroll Tax: Guide to Legislation 2020-21
page 6Due to the COVID-19 measures, you will be required Previous rates
to declare wages for two split periods in your 2020-21
Effective Annual Australian Taxable Payroll
Annual Reconciliation:
Dates Does Exceeds Exceeds
July 2020 to August 2020 (Period 1) not $600 $1 million
September 2020 to June 2021 (Period 2) exceed 000 but but not
$600 not $1.5
The due date for completion and lodgement of the 000 $1 million
annual reconciliation return is 28 July. RevenueSA will million
accept lodgement of returns on the next business day
variable
where 28 July falls on a weekend or public holiday. 1 July 2017 to
from
31 December nil 2.5% 4.95%
2.5% to
The 2020-21 Annual Reconciliation is due on 2018
4.95%
Wednesday, 28 July 2021
1 July 2009 to
Completion of the annual reconciliation return is 30 June 2017
nil 4.95%
through RevenueSA Online:
revenuesaonline.sa.gov.au Which rate do I use?
Information about the annual reconciliation process The rate will be calculated based on the employer’s
is sent to registered employers in June each year. total Australian wages. If the employer is part of
a group, it will be calculated on the group’s total
Penalty tax and/or Interest may be applied to the late
Australian wages.
lodgement of an annual reconciliation.
The actual payroll tax rate that will apply for an
Modifying your annual employer cannot be finalised until the annual
reconciliation process is completed in July each year.
reconciliation
However, to ensure that eligible employers that lodge
If needed, an annual reconciliation can be modified if
monthly payroll tax returns can pay payroll tax at
lodged within the last five financial years.
the lower rates, an indicative payroll tax rate for the
Annual reconciliations lodged via RevenueSA Online employer will be determined based on the employer’s
can be modified via RevenueSA Online. estimated annual taxable Australian wages declared
at the start of the financial year. RevenueSA Online
Calculation of payroll tax will calculate the indicative payroll tax rate.
Use the payroll tax calculator to work out an
Payroll tax is generally payable monthly. estimate of the rate you may pay.
The tax payable is calculated using the formula Differences between the indicative payroll tax rate
below: and actual payroll tax rate will be determined as part
Gross Taxable of the annual reconciliation process, with any over or
South Tax Payroll Tax
(
Australian
- Deduction ) x
Rate
=
Payable
under payment of payroll tax being resolved at that
Wages time. This will mean that:
This basic formula varies based on group businesses will be entitled to a refund where the
membership and interstate wages. indicative rate is higher than the actual rate for the
financial year; but
Tax rates for businesses where the indicative rate is lower
than the actual rate for the financial year the
Current rates business will be required to pay any shortfall as
part of the annual reconciliation process.
Annual Australian Taxable Payroll
from 1 January 2019 In light of the above, and to ensure that there is not
an underpayment of tax at the annual reconciliation,
Does not exceed Exceeds $1.5 Exceeds
$1.5 million million but not $1.7 million businesses are encouraged to review their individual
$1.7 million and total group Australian (if applicable) estimates
both at the start of the year and throughout the year
variable from to ensure that the appropriate rate is being applied.
nil 4.95%
0% to 4.95%
What is my deduction?
Employers are entitled to a deduction amount which
is subtracted from their wages paid. The maximum
deduction available is $600 000 per annum.
Payroll Tax: Guide to Legislation 2020-21
page 7The deduction an employer is entitled to claim may
Example: Non-group - small business
vary according to whether the employer is a member
of a group, how much of the financial year the Tiny Pty Ltd is a non-group employer who pays wages in
employer (or group) employ and the employer’s (or South Australia only. The estimated total wages for the
group’s) interstate wages. 2020-21 financial year are $1 560 000.
A reduced payroll tax rate of 1.48% is applied as the
See grouping of employers for more details. estimated wages are between $1 500 000 and $1 700 000.
Employers who do not employ in South Australia for During March 2021, Tiny Pty Ltd paid wages of $130 000.
the full financial year will receive a proportionate The company’s payroll tax liability for March 2021 is:
amount of the deduction. ($130 000 - $50 000) x 1.48% = $1184.00
receive full receive 1/2 receive 3/4 Example: Non-group
deduction of deduction of deduction
entitlement entitlement entitlement
M.Ployer Pty Ltd is a non-group employer who pays
wages in South Australia only. The estimated total wages
for the 2020-21 financial year are $4 200 000.
employing for employing for employing for
full financial year half of financial year three quarters
A payroll tax rate of 4.95% will apply as the estimated
of financial year wages are above $1 700 000.
During March 2021, M.Ployer Pty Ltd paid wages of
Employers not wishing to claim an exemption $350 000.
threshold amount are required to pay tax at the The company’s payroll tax liability for March 2021 is:
relevant rate on all South Australian wages for the
month. ($350 000 - $50 000) x 4.95% = $14 850.00
For employers who also employ interstate, their
deduction entitlement is calculated using the formula Example: Group
below: M.Ployer Pty Ltd and I.2.M.Ploy Pty Ltd are group
employers. They pay wages in South Australia only and
Taxable South M.Ployer Pty Ltd is the group’s DGE. The estimated total
Australian Wages
( ) x
Maximum
Deduction
X
No. of Days
Employing in SA*
group wages for the 2020-21 financial year are $6 240 000.
Taxable Australia A payroll tax rate of 4.95% will apply as the estimated
Wide Wages 365**
wages are above $1 700 000.
* Equals the number of days in the relevant financial year of which the employer The wages paid during March 2021 are:
paid or was liable to pay taxable wages.
**366 days should be used if a leap year M.Ployer Pty Ltd $400 000
I.2.M.Ploy Pty Ltd $120 000
Employers who are members of a group are not
all entitled to a deduction. The group is required to Total Wages $520 000
designate one of its members to claim the deduction As the DGE, M.Ployer is entitled to claim a monthly
entitlement on behalf of the group. This member is deduction of $50 000. They are entitled to the full
known as the Designated Group Employer (referred deduction as the group only pays wages in South Australia.
to as the DGE). Remaining group members are not I.2.M.Ploy Pty Ltd is not entitled to a deduction and must
able to claim any deduction entitlement in their pay tax on the full wages amount.
returns unless, during the annual reconciliation The company’s payroll tax liabilities for March 2021 are:
process, it is identified that there is an unused
M.Ployer Pty Ltd ($400 000 x 4.95% = $17 325.00
component of the deduction.
- $50 000)
RevenueSA must be informed, in writing, whenever I.2.M.Ploy Pty Ltd $120 000 x 4.95% = $5940.00
there is a change in the group membership.
RevenueSA will advise the action to be taken to Total tax $23 265.00
payable
establish the deduction entitlement of the group.
Calculation of tax: employers and Calculation of tax: employers and
groups who only pay wages in groups that pay wages in South
South Australia Australia and interstate
If an employer carries on employment activity only Where an employer, or at least one member of a
in South Australia for the full financial year, the group, carries on employment activity, both in South
employer is entitled to a full deduction. If a group Australia and elsewhere in Australia, they are entitled
exists, the DGE may claim the full deduction; all other to a proportional deduction only. The proportional
members of the group are required to pay tax on entitlement bears the same relationship to the
their total South Australian wages. maximum deduction as South Australian wages bear
to total Australian wages.
Payroll Tax: Guide to Legislation 2020-21
page 8Example: Non-group - small business South Australian Wages
x
Maximum deduction
Australian Wages (currently $600 000)
Tiny Pty Ltd is a non-group employer who pays wages in
South Australia and Victoria. The total estimated wages $800 000
x $600 000 = $240 000
for 2020-21 are as follows: ($20 000 per month)
$2 000 000
South Australia $800 000
As the DGE, M.Ployer is entitled to claim a monthly
Victoria $800 000 deduction of $20 000. This is a reduced deduction as the
Australian Total $1 600 000 group pays wages in South Australia and Victoria.
I.2.M.Ploy Pty Ltd is not entitled to a deduction and must
A reduced payroll tax rate of 2.47% is applied as the pay tax on the full wages amount.
estimated wages are between $1 500 000 and $1 700 000.
During March 2021, M.Ployer Pty Ltd paid $65 000 and
The deduction entitlement is calculated as follows: I.2.M.Ploy Pty Ltd $40 000 wages in South Australia.
South Australian Wages Maximum deduction The companies’ payroll tax liability for March 2021 are:
x
Australian Wages (currently $600 000)
M.Ployer Pty Ltd
$800 000 $300 000
x $600 000 = ($25 000 per ($65 000 - $20 000) x 4.95% = $2227.50
$1 600 000 month)
I.2.M.Ploy Pty Ltd
During March 2021, Tiny Pty Ltd paid $75 000 wages in
$40 000 x 4.95% = $1980.00
South Australia.
The company’s payroll tax liability for March 2021 is: Total tax payable $4207.50
($75 000 - $25 000) x 2.47% = $1235.00
Example: Non-group Payment of payroll tax
M.Ployer Pty Ltd is a non-group employer who pays RevenueSA Online facilitates the online lodgement
wages in South Australia and Victoria. The total estimated and payment of monthly returns and the annual
wages for 2020-21 are as follows: reconciliation return. All payroll tax returns must be
South Australia $500 000 lodged via RevenueSA Online.
Victoria $1 500 000 For more details on the functions provided through
Australian Total $2 000 000 RevenueSA Online please visit revenuesa.sa.gov.au/
RevenueSAOnline.
A payroll tax rate of 4.95% will apply as the estimated
wages are above $1 700 000. If payroll tax is not paid by the due date, interest and/
The deduction entitlement is calculated as follows: or penalty tax may be imposed. RevenueSA Online
also allows a ‘nil’ return to be lodged if there is no
South Australian Wages Maximum deduction
x payroll tax liability for a particular month.
Australian Wages (currently $600 000)
Payment of payroll tax may be made via one of the
$500 000 $150 000
x $600 000 = ($12 500 per following options:
$2 000 000 month)
During March 2021, M.Ployer Pty Ltd paid $40 000 wages Payroll Tax Electronic Payment
in South Australia. Authority (EPA)
The company’s payroll tax liability for March 2021 is:
Taxpayers paying via EPA are required to nominate
($40 000 - $12 500) x 4.95% = $1361.25 a bank account for payment. The electronic payment
must be initiated by the user within RevenueSA
Example: Group Online, RevenueSA does not independently access
the taxpayer’s bank account. An employer needs to
M.Ployer Pty Ltd and I.2.M.Ploy Pty Ltd are group
employers. They pay wages in South Australia and complete an application to use this facility.
Victoria. M.Ployer Pty Ltd is the group’s DGE. The group’s
An Application is available on revenuesa.sa.gov.au
total estimated wages for 2020-21 are as follows:
South Australia $800 000 Payroll Tax Electronic Funds
Victoria $1 200 000 Transfer (EFT)
Australian Total $2 000 000
Users must log into RevenueSA Online to lodge and
A payroll tax rate of 4.95% will apply as the estimated complete an expected EFT return each month. This
wages are above $1 700 000. will generate an EFT Payment Advice containing
The deduction entitlement is calculated as follows: the BSB, Account Number and Payment Reference
Number.
Payroll Tax: Guide to Legislation 2020-21
page 9The Payment Reference Number changes for For more details on:
each return period. The correct Payment Reference
SBR visit sbr.gov.au
Number for the return period must be used when
making payment. If the incorrect number is used, MyGovID visit mygovid.gov.au
payment may be returned and non-payment Using RevenueSA Online through SBR visit
penalties and bank fees may result. The correct revenuesa.sa.gov.au
Payment Reference Number for each return period is
only provided after an expected return on RevenueSA
Online is submitted.
Wages subject to payroll
Once a Payment Advice is generated the details tax
contained are used to make payment via EFT with a
financial institution. When are wages subject to
The payment advice generated from RevenueSA payroll tax in South Australia?
Online is not required to be submitted if payment is
made by EFT. The nexus provisions determine in which Australian
jurisdiction a payroll tax liability arises.
BPAY The nexus provisions only affect circumstances
If payment is made by BPAY it is important that the where employees provide services in more than
correct Biller Code and Reference Number printed one Australian jurisdiction or partly in more than
on the Payroll Tax Payment Advice (generated one Australian jurisdiction and partly overseas in
from RevenueSA Online) or Assessment Payment a calendar month. Where an employee provides
Advice is used. This will ensure correct allocation services wholly in one Australian jurisdiction, payroll
of the payment. If the incorrect number is used, tax will continue to be paid in the jurisdiction where
the payment may not be allocated as intended and those services are performed.
penalty tax and interest may result. Please note The nexus provisions provide a four tiered test to
that a different reference number is provided on determine a payroll tax liability where the employee
each Payroll Tax Payment Advice or Assessment provides services in more than one Australian
Payment Advice. jurisdiction and/or partly overseas. This test is as
The Payment Advice generated from RevenueSA follows:
Online is not required to be submitted if payment is 1. Payroll tax is payable in the jurisdiction where the
made by BPAY. employee’s principal place of residence (PPR) is
BPAY payments for payroll tax from a credit account located.
will not be accepted. 2. If an employee does not have a PPR in any
Australian jurisdiction during the relevant month,
Cheque payroll tax is payable in the jurisdiction where the
If payment is made by cheque, the tax is not deemed employer has registered their Australian Business
to have been paid until the cheque has been cleared Number (ABN) address.
on presentation. If the employer does not have a registered ABN
Cheque payments should be made payable to the address, or has two or more ABN addresses in
Commissioner of State Taxation. Payment can be different jurisdictions, payroll tax is payable in the
made by mail or by courier. In all cases the cheque jurisdiction where the employer has their principal
must be accompanied with the Payroll Tax Payment place of business (PPB).
Advice (generated from RevenueSA Online) or 3. If the employee does not have a PPR in any
Assessment Payment Advice. jurisdiction and the employer does not have an
ABN address or PPB in any Australian jurisdiction,
Standard Business Reporting payroll tax is payable in the jurisdiction where the
(SBR) wages are paid or payable in that calendar month.
RevenueSA will accept the lodgement of payroll tax If wages are paid by the employer into an
monthly returns through your business system, if it is employee’s bank account, the wages are
SBR-enabled. The 2020-21 annual reconciliation (due deemed to be paid in the jurisdiction in which
28 July 2021) can also be lodged through SBR. the employee holds their bank account. If wages
are paid or payable in a number of jurisdictions,
Taxpayers wishing to use this lodgement facility must payroll tax is paid in the jurisdiction where the
be a registered RevenueSA Online user and register largest proportion of the employee’s wages is
with MyGovID. payable.
Payroll Tax: Guide to Legislation 2020-21
page 104. If both the employee and employer are not (a) The employee performs services in more than
based in any Australian jurisdiction and wages one Australian jurisdiction and/or partly overseas,
are not paid in Australia, a payroll tax liability and the employee does not have a PPR in an
arises in South Australia if the services are mainly Australian jurisdiction, and the employer does not
performed in South Australia (including South have a registered business address or a PPB in
Australian coastal waters) in that calendar month an Australian jurisdiction and the shares/options
(that is, the work performed in South Australia relate to an Australian company.
during that month is greater than 50%).
(b) The employee performs services wholly outside
For further information see Revenue Ruling PTA039: all Australian jurisdictions for less than six months
Nexus Provisions but is paid in an Australian jurisdiction.
Overseas employment In these situations, where the grant of a share or
option constitutes wages, the shares or options are
Employees working in another country for six taken to be paid or payable in the jurisdiction where
months or less the Australian company is registered.
Where an employee is working in another country or For further guidance on the application of the nexus
countries for a period of six months or less, a payroll provisions, please refer to Revenue Ruling PTA039:
tax liability arises in South Australia if the wages are Payroll Tax Nexus Provisions
paid or payable in South Australia.
Employees working in another country for more Definition of wages
than six months Having established the circumstances in which wages
If an employee is working in another country or are taxable in South Australia, it is necessary to
countries for a continuous period of more than six consider what constitutes ‘wages’.
months, then the wages paid or payable to that The definition of ‘wages’ in the Act is broad and is not
employee for the whole period will be exempt from restricted to wages or salaries.
payroll tax. In these circumstances, the six month
period need not be within the same financial year, The term ‘wages’ includes:
but must be a continuous period. salaries and wages;
Should an employee that is working in another remuneration;
country return to Australia, it will not be considered
to be a break in continuity of their overseas bonuses;
employment if the employee returns to Australia commissions;
under the following circumstances:
allowances;
for a holiday; or
employment termination payments and accrued
to perform work exclusively related to the leave paid on termination;
overseas assignment for a period of less than one
fringe benefits;
month.
shares and options;
In either case, the employee must immediately return
to that country or another country to continue their employer-funded (pre-income tax) superannuation
overseas employment. contributions including non-monetary
contributions;
Services performed offshore
salary sacrifice; and
Where an employee is working outside all Australian
jurisdictions, but not in another country, the wages any remuneration paid to or in relation to
are taxable in the Australian jurisdiction in which the company directors or members of the governing
wages are paid or payable. The exemption available body (e.g. directors’ fees).
for employees working in another country or This list is not exhaustive.
countries would not apply in this circumstance.
Please refer to the checklist of taxable items for
Shares and options further guidance on the types of payments that are
subject to payroll tax.
Where wages comprise the grant of a share or option,
the payroll tax liability (for the grant of a share or Payments to on-hired employment agency workers or
option) is also governed by the new nexus rules. relevant contractors may also be taxable
For further information see contractors and
For further information on shares and options, refer to
employment agency contracts
definition of wages
If you are uncertain on whether a particular class
However, certain circumstances relating to shares
of worker or payments made to them is subject to
and options attract different nexus rules. These are
payroll tax please contact RevenueSA.
outlined as follows:
Payroll Tax: Guide to Legislation 2020-21
page 11Indirect payments The only exceptions to the general rule that
allowances are taxable in full are motor vehicle
‘Wages’ do not have to be paid directly by an allowances, accommodation allowances and living
employer to an employee in order to be taxable. away from home allowances.
Payments to a person other than an employee, or
payments by a person other than the employer, Motor vehicle allowances
are subject to tax where the payments are made A motor vehicle allowance paid or payable to an
in relation to an employee’s services. For example, employee is taxable only to the extent that it exceeds
an entertainment allowance paid to an employee’s the exempt rate per kilometre, or an amount
spouse is taxable as it is a payment to a third party in calculated as the exempt component. The exempt
relation to the employee’s services. component is calculated as follows:
Wages & salaries
Taxable wages and salaries are the gross wages and
E=KxR
salaries paid including any Pay-As-You-Go (PAYG) where
withholding amounts or other deductions made E is the exempt component
by an employer on behalf of an employee. Taxable
wages include such payments as overtime pay, K is the number of business kilometres
penalty payments, sick pay, holiday pay and leave travelled during the financial year
loadings. R is the exempt rate
Goods & Services Tax (GST) The number of business kilometres travelled during
the financial year is determined by either:
Payroll tax is not payable on the Goods and Services
Tax (GST) component that may arise in payments to a continuous recording method during the
employees or deemed employees. financial year;
the Australian Taxation Office (ATO) 12-week
Annual, sick & long service leave averaging method; or
payments some other method the Commissioner may
Annual leave, sick leave and long service leave approve in writing.
payments made to an employee who will be If the number of business kilometres is not recorded
continuing in the service of their employer and via one of the methods described above, the full
payments made in lieu of accrued annual, sick, allowance will be taxable.
long service or pro-rata leave at termination of
employment, are liable to payroll tax where any such The exempt rate is aligned with the rate determined
payment represents a reward for service to which the by the Federal Commissioner of Taxation for the
employee has a pre-existing enforceable right. previous financial year (i.e. rate used in 2020-21 is the
ATO 2019-20 rate).
Payments relating to accrued leave entitlements are
liable to payroll tax, whether paid on, before or after For 2020-21, the motor vehicle allowance exempt rate
termination of the employee’s services. for payroll tax purposes is $0.68 per kilometre.
Similarly, any payment of deferred or accrued wages, Previous exempt rates can be located on the Rates
salaries, commissions, bonuses, allowances, etc. is and Thresholds page.
liable to payroll tax whenever paid. Where a motor vehicle allowance is paid as a set
allowance (rather than on a cents per kilometre
Jury duty basis), the taxable amount is the amount by which
There is no exemption in respect of payments made the set allowance exceeds the amount calculated
to an employee who is on jury duty. by multiplying the actual kilometres travelled by the
prescribed rate.
Allowances
For further information see Revenue Ruling PTA005:
As a general rule, allowances are taxable in full even Exempt Allowances
if they are paid to compensate an employee for an
expense which may be (or has been) incurred in The exemption of a prescribed portion of a motor
relation to work (e.g. uniform allowances). This is the vehicle allowance payment applies only where the
case even if an allowance is paid under an award travelling allowance is paid or payable for business
or employment agreement (e.g. overtime meal travel purposes using a motor vehicle supplied by the
allowances). employee.
For information on motor vehicle allowances paid to
For further information see Revenue Ruling PTA005:
real estate salespersons, see Revenue Ruling PTA025:
Exempt Allowances
Motor Vehicle Allowance Paid to Real Estate
Salespersons
Payroll Tax: Guide to Legislation 2020-21
page 12Accommodation allowances Reimbursements
An accommodation allowance paid or payable to Reimbursements of expenses incurred by employees
an employee is taxable only to the extent that the on behalf of their employers are not taxable unless
allowance exceeds the exempt rate. Wages do not they have a taxable value under the FBT Act.
include an accommodation allowance that does not
exceed the exempt rate. For a payment to be considered a reimbursement, it
must have the following two characteristics:
The exempt rate for payroll tax purposes is based on
the related ATO figure, and is the total reasonable 1. the expense must be incurred by the employee
amount for daily travel allowances using the lowest and the precise amount is reimbursed, or if the
capital city for the lowest salary band for the financial payment was made in advance, a receipt relating
year. to the expense must be given to the employer
along with any change; and
For 2020-21, the accommodation allowance exempt
rate for payroll tax purposes is $283.45 per night 2. the expense must be incurred in the course of the
(Room $147.00, Incidentals $20.40, Meals $116.05). employer’s business.
If a payment does not have both characteristics, it
Previous exempt rates can be located on the Rates
is not considered a reimbursement and is generally
and Thresholds page.
taxable in full.
The exemption applies only where the
accommodation allowance is designed to Termination payments
compensate an employee for accommodation and
The Act provides that certain payments made to an
directly related meal expenses necessarily incurred
employee on termination of employment are subject
where an employee is required, in the course of
to payroll tax. Specifically, the following payments are
employment, to be absent overnight from their usual
taxable:
place of residence.
payments for actual services rendered up to the
For further information see Revenue Ruling PTA005: date of termination;
Exempt Allowances
accrued annual and long service leave; and
For information on accommodation allowances paid to
truck drivers, see Revenue Ruling PTA024: Overnight employment termination payments.
Accommodation Allowances Paid to Truck Drivers
Accrued leave
Living away from home allowances Both accrued annual leave and long service leave
A living away from home allowance is paid to payments are taxable when paid to an employee
compensate an employee for additional expenses on termination of the employee’s services. It should
they may incur as a result of being required to be noted that leave payments paid to a continuing
temporarily live away from home in order to perform employee are also subject to payroll tax.
their duties of employment. This usually occurs
Employment termination payments
where the employee has been required to work
temporarily at another location, which necessitates Payroll tax applies to an employment termination
a temporary change in residence. The allowance payment (formerly eligible termination payment)
will include components designed to compensate (ETP), as defined in Section 82-130 of the Income Tax
for additional food and accommodation costs. It is Assessment Act 1997 (Cwlth) (the “ITAA 1997”), when
distinguishable from a travel allowance which is paid paid by an employer as a result of an employee’s
to an employee to compensate for accommodation, termination.
meals and incidental expenses incurred while the
The amount subject to payroll tax is the whole of
employee is travelling on a short-term assignment
the ETP paid by the employer (whether paid to the
not involving a temporary relocation of the
employee or to a roll-over fund), less any component,
employee’s place of employment.
which is exempt income when received by the
Generally, a living away from home allowance is a employee. ETPs paid by employers may include
fringe benefit under Section 30 of the Fringe Benefits payments for:
Taxation Assessment Act 1986 (Cwlth) (the “FBT Act”).
unused sick leave or rostered days off;
If the allowance falls within the definition of a living
ex gratia payments or ‘golden handshakes’;
away from home allowance under Section 30 of the
FBT Act, the taxable value of the benefit under the payment in lieu of notice or service contract
FBT Act, grossed-up by the Type 2 factor as shown on payouts;
the FBT Act return is subject to payroll tax. However, compensation for loss of job or wrongful
if the allowance is not considered a living away from dismissal; or
home allowance under the FBT Act, the treatment
of the allowance for payroll tax purposes will be
the same as the treatment of an accommodation
allowance (see above).
Payroll Tax: Guide to Legislation 2020-21
page 13 bona fide redundancy or early retirement Where such an election is made, employers must
payments in excess of the income tax free include in each monthly payroll tax return from July to
limit. (The income tax free components of such May, one-twelfth of the taxable value (for payroll tax
payments do not form part of an ETP and are, purposes) of fringe benefits using the FBT return for
therefore, not subject to payroll tax). the year ending 31 March immediately preceding the
start of each financial year. The annual reconciliation
Fringe benefits for each financial year will include the taxable value
(for payroll tax purposes) of fringe benefits declared
The definition of wages for payroll tax purposes
in the FBT return ending 31 March immediately
includes any fringe benefits as defined in the FBT Act.
before the annual reconciliation.
Therefore, as a general rule, benefits that are taxable
Where an employer had made an election to adopt
under the FBT Act are also taxable under the Act
the alternative method of declaring fringe benefits
and must be declared as wages for payroll tax
under the old Act, the election remains in force
purposes. The only exception to this general rule is
and the employer is not required to make a further
a tax-exempt body entertainment fringe benefit as
election under the Act.
defined in the FBT Act. Although tax-exempt body
entertainment fringe benefits are subject to FBT, they Once an election is made, an employer will not be
are specifically exempt for payroll tax purposes. permitted to revert to declaring the actual value of
fringe benefits in monthly payroll tax returns, unless
If a benefit is exempt under the FBT Act (e.g. a laptop
the Commissioner gives approval in writing.
computer) it is also exempt from payroll tax. In
addition, if a fringe benefit has a nil taxable value for An employer must not use a combination of
FBT purposes (e.g. the taxable value is reduced to nil methods.
under the otherwise deductible rule), it also has a nil
taxable value for payroll tax purposes. Share & options
Records used to substantiate FBT claims made to the The value of an employer’s contribution to any grant
ATO are also acceptable for payroll tax. of a share or option to an employee or deemed
employee, a director or former director, member
Calculating the fringe benefit value or former member of the governing body of the
Under the FBT Act, fringe benefits are categorised company constitutes wages and is subject to payroll
into two types depending on the GST implications: tax.
Type 1 fringe benefits for which the employer can The granting of a share or an option occurs if a
claim a GST input tax credit; and person acquires a share or, in the case of an option, a
right to the share.
Type 2 fringe benefits for which the employer
cannot claim a GST input tax credit. A value of the share or option becomes liable on
the ‘relevant day’. The employer can elect to treat
The fringe benefit taxable value for payroll tax the relevant day as either the date that the share or
purposes is determined by grossing up all fringe option is granted to the employee, or the ‘vesting
benefits by using only the Type 2 factor. date’.
Gross-up rates for fringe benefits are available on theThe vesting date for a share is the date when any
ATO website conditions applying to the grant of the share have
Please note that the ATO requires that certain fringe been met and the employee’s legal or beneficial
benefits, referred to as the ‘reportable fringe benefits interest in the share cannot be rescinded. From 1
amount’, must be shown on the employee’s payment July 2013, the vesting date for a share is the earlier
summary if the benefits amount exceeds $2000. of either the date as defined above or the date at the
These reportable fringe benefits may not include the end of seven years from the date on which the share
value of all fringe benefits provided to employees and is granted to the employee.
is not necessarily the amount to be used for payroll The vesting date for an option is the earlier of either
tax purposes. one of two dates (and from 1 July 2013, one of the
three dates). The dates are:
Declaring fringe benefit value
1. when the share to which the option relates is
Employers are required to declare in their monthly
granted to the employee;
returns the actual value of fringe benefits provided in
each month. However, for administrative ease, past 2. when the right under the option to have the
and present payroll tax legislation allows employers relevant share transferred, allotted or vested is
to formally elect to adopt an alternative method, exercised by the employee; or
whereby the amounts declared are based on the FBT
3. from 1 July 2013, at the end of the period of seven
returns submitted to the ATO.
years from the date on which the option is granted
to the employee.
Payroll Tax: Guide to Legislation 2020-21
page 14If the granting of a share or option constitutes to or as a form of superannuation, provident
wages, the amount of the wages is the value of or retirement fund or scheme, including to the
the share or option on the relevant day, less any Superannuation Holding Accounts Special Account
consideration paid or given by the employee for the within the meaning of the Small Superannuation
grant (excluding consideration in the form of services Accounts Act 1995 (Cwlth), and a retirement savings
rendered). The value of a share or an option is the account within the meaning of the Retirement
market value or the amount determined as provided Savings Accounts Act 1997 (Cwlth);
for in Section 83A-315 of the ITAA 1997 and Division
involving the crediting of an account of an
83A of the Income Tax Assessment Regulations 1997
employee, or any other allocation to the benefit
(Cwlth).
of an employee (other than the actual payment
If an employer does not include the value of a grant of a contribution), or the crediting or the debiting
of a share or option in its taxable wages for the of any other account, or any other allocation or
financial year in which the grant occurred, the wages deduction, so as to increase the entitlement or
constituted by the grant are taken to have been paid contingent entitlement of the employee under any
or payable on the vesting date of the share or option. form of superannuation, provident or retirement
fund or scheme; or
Therefore, where a share or option granted after
1 July 2007 has not been declared for payroll tax in respect of an employee who is a member
purposes before 1 July 2013, i.e. the employer elects of the old or new scheme of superannuation
the relevant date as the vesting date, the seven year under the Superannuation Act 1988 (Cwlth)
vesting date is the latest date for vesting unless the or of any other unfunded or partly funded
other specified vesting events occur before the end of scheme of superannuation. The Treasurer may
the seven years. estimate the contingent liability of an employer
for contributions that will be payable and that
The employer may reduce the taxable wages declared
estimate may be treated as a contribution paid
by the value of any previously declared share or
or payable by an employer in respect of an
option value, if the grant of a share or option was
employee for the purposes of the definition of a
rescinded because the vesting conditions have not
superannuation contribution.
been met. However, this reduction in the taxable
wages would not apply in circumstances where the Please note that taxable superannuation
employee decided not to exercise the option. contributions include:
If the grant of a share or option is withdrawn, superannuation contributions paid or payable in
cancelled or exchanged before the vesting date respect of a company director (including a non-
for some valuable consideration (other than the employee director), or in respect of a person taken
grant of other shares or options), the date on which to be an employee under the contractor provisions
that occurs is deemed to be the vesting date and in Division 7;
the taxable amount is taken to be the value of the
non-monetary contributions to a superannuation
consideration.
fund on behalf of an employee, a contractor
The seven year vesting date still applies to shares deemed to be an employee or a director. The
and options that have been forfeited or lapsed value of these contributions is to be worked out in
prior to seven years from the grant date if the other accordance with Section 43.
specified events have not occurred for those cases
where the employer has elected the vesting date as Contribution holidays
the relevant date. However, as such shares/options In respect of contribution holidays, where it is
have been forfeited or lapsed prior to seven years determined that an employer is on a contribution
from the grant date, the value of the shares/options holiday, as a result of a superannuation fund
at the seven year vesting date is regarded as being nil being in surplus, and the trustee(s) during that
because the share/option does not exist at that time. period nonetheless credit amounts to accounts of
individual members of the fund, such crediting will be
Superannuation contributions considered a superannuation benefit, and therefore
The definition of wages includes all employer-funded will constitute wages liable to payroll tax.
superannuation contributions.
Salary sacrifice arrangements
Superannuation subject to payroll tax includes
employer contributions paid or payable: Employers who make payments to a superannuation
fund(s) of its employee’s or director’s choice as part
to a superannuation fund within the meaning of of a salary packaging arrangement (salary sacrifice
the Superannuation Industry (Supervision) Act 1993 arrangements) are subject to payroll tax.
(Cwlth);
A salary sacrifice arrangement refers to an
as a superannuation guarantee charge within arrangement between an employer and the
the meaning of the Superannuation Guarantee employee whereby the employee agrees to forego
(Administration) Act 1992 (Cwlth);
Payroll Tax: Guide to Legislation 2020-21
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