Recently, the announcement of the government’s 2018-19 South Australian Budget provided some payroll tax relief to some small businesses in South Australia.
From 1 January 2019, small businesses employing people in SA with an annual Australian payroll between $600k and $1.7m benefit from a reduced payroll tax rate. Where your payrolls are below or above these amounts your SA obligations should remain unchanged.
What you need to know
The SA payroll tax rates have reduced from 1 January 2019 as follows:
It should be noted that the threshold of $600,000 for calculating the amount of payroll tax remains unchanged. Whilst there is no payroll tax payable from the 1st of January 2019 where the total annual payroll does not exceed $1.5m p.a., if it exceeds this amount the excess above $600,000 will be subject to tax at the applicable rate, which varies from 0% to 4.95% where the annual payroll is between $1.5m and $1.7m. Where the payroll exceeds $1.7m the maximum rate of 4.95% will apply on the amount after $600,000.
By comparison, the rates applicable in other states are currently:
What does this mean for my business?
Where your weekly payroll from 1 July 2019 is less than $28,846 you no longer need to pay payroll tax in SA. However, you must remain registered until the annual reconciliation process occurs in July 2019. Employers who reported that their estimated wages are below $1.5m from 1 January should already have been converted to an annual return (rather than monthly) and should be able to deal with their payroll tax obligations on the annual reconciliation return.
Previously you needed to register where your weekly payroll exceeded $11,538 ($50,000 per month). RevenueSA now recommends you only need to register where your wages in a month exceed $125,000.
The reduced rates are only applicable from 1 January 2019. Therefore, you will need to split your wages on your 2019 annual payroll tax reconciliation to account for the two periods before and after 31 December 2018. This reconciliation is currently due on 22 July 2019.
What should I do?
With the change in rates, now is a good time to review your payroll tax process to:
• ensure that the correct components of wages are being captured;
• you are correctly grouping the entities in your group;
• you are correctly accounting for taxes in each State;
• you are applying available concessions and exemptions in each state; and
• you are correctly identifying contractor arrangements which might be subject to tax.
We understand this can be confusing and are here to assist you and work with you, to get you where you need to be. Please contact us so we can help you navigate these changes confidently.