COVID-19 relief: Payroll Tax Employer Guide

The threshold will be increased to $1 million on 1 July 2020.  This replaces the previously announced increase planned for 1 January 2021. 

The threshold increase will be reflected in Revenue Online when it comes into effect in July.

The initial threshold increase to $950,000 that came into effect on 1 January 2020 is already reflected in Revenue Online for employers lodging monthly and quarterly returns. Employers who cancel their registration as a result of the increase will need to wait until the annual reconciliation function is available in August 2020 for adjustments to be made to their tax liability.

Payroll tax will be waived from March to June 2020 for employers, or groups of employers, whose Australian taxable wages are less than $7.5 million at 30 June 2020.

Employers must retain evidence of their Australian taxable wages at 29 February 2020 showing their entitlement to claim the waiver.

For group employers, the designated group employer (DGE) is responsible for determining the group’s Australian taxable wages and for notifying group members if the group is eligible for the waiver. Group members must retain evidence to show the DGE notified them of their eligibility to claim the waiver.

The Treasurer encourages eligible businesses not negatively affected by COVID-19 to keep paying tax as normal so the funds allocated to this initiative can be used to assist other businesses that are not so fortunate.

Australian taxable wages less than $5 million at 29 February 2020

Do not apply for the waiver. Your payroll tax for March to June will automatically be waived.

• Lodge and pay all returns up to and including your February return.
• If your Australian taxable wages (including WA taxable wages and interstate taxable wages) are less than $5 million, lodge your returns for March to June, entering your WA taxable wages as normal. Then record your WA taxable wages in the 'exempt (other) wages' field to apply the waiver.
• You will continue to be entitled to the waiver even if your Australian taxable wages are $7.5 million or more at 30 June 2020.

Australian taxable wages $5 million or more at 29 February 2020, or new employers from 1 March

Apply to defer lodging and paying returns if your Australian taxable wages were $5 million or more at 29 February and you expect your wages to be less than $7.5 million at 30 June, or if you are a new employer registered for payroll tax from 1 March 2020.

Payroll tax for March to June 2020 will be waived at annual reconciliation if Australian taxable wages are less than $7.5 million at 30 June 2020.

• Complete the Application Form and submit it via a web enquiry. If you are a member of a group for payroll tax purposes, the designated group employer (DGE) must submit the application.
• Lodge and pay all returns up to and including your February return.

If your application is approved, your due date for lodgment and payment will be extended to 21 July. Your approval advice will include instructions for completing annual reconciliation.

• If your 2019-20 annual Australian taxable wages are less than $7.5 million, payroll tax for the March to June returns will be waived.
• If your 2019-20 annual Australian taxable wages are $7.5 million or more, you will need to complete your returns and pay tax for the months that were deferred.

If you expect your annual Australian taxable wages will be $7.5 million or more and you are concerned about meeting your payroll tax obligations, you can apply online for an interest-free payment arrangement.

The Pay-Roll Tax Relief (COVID-19 Response) Act 2020 received Royal Assent on 20 April 2020 and is deemed to take effect from 1 March 2020. The Act deals with the payroll tax waiver and the exemption for payments made under the JobKeeper Payment scheme. See the Parliament website for information about the Act and the Explanatory Memoranda.

You do not need to apply for the grant.

A one-off grant of $17,500 will be given to employers, or groups of employers, whose annual Australian taxable wages for 2018-19 were more than $1 million and less than $4 million.  Grants will automatically be paid by cheque from July.

• If you were not previously registered for payroll tax, your 2019-20 Australian taxable wages will be used to determine your eligibility for the grant.  Your grant will automatically be paid by cheque at the completion of the annual reconciliation process.   
• For a group of employers, a single grant will be payable to the designated group employer.

Eligible taxpayers should log in to Revenue Online to ensure their postal address is correct.

Wages paid by employers that are subsidised by the Australian Government’s JobKeeper Payment are exempt from payroll tax. The exemption does not apply to any part of wages that are not subsidised.

See the Treasurer’s media statement for more information.

The Pay-Roll Tax Relief (COVID-19 Response) Act 2020 received Royal Assent on 20 April 2020 and is deemed to take effect from 1 March 2020. The Act deals with the payroll tax waiver and the exemption for payments made under the JobKeeper Payment scheme. See the Parliament website for information about the Act and the Explanatory Memoranda.