How to determine payroll taxes

Steps to take

In Australia, determining payroll taxes involves several steps.

Understand the payroll tax threshold

The first step is to determine if your business is liable to pay payroll tax. In Australia, businesses are subject to payroll tax if their total Australian wages exceed the relevant threshold, which varies from state to state. Each state or territory has its own payroll tax office where you can find the specific thresholds.

Calculate taxable wages

Once you know you're liable for payroll tax, calculate your taxable wages. This includes all payments subject to payroll tax, such as salaries, wages, commissions, bonuses, and certain allowances.

Exemptions & deductions

Be aware of any exemptions or deductions available in your state. Certain types of payments, such as superannuation contributions, may be exempt from payroll tax. Additionally, some states offer deductions for wages paid to apprentices or trainees.

Apply the tax rate

Once you've determined your taxable wages, apply the relevant payroll tax rate for your state or territory. The rates typically vary depending on the size of your payroll and your industry.

Submit returns & pay taxes

Finally, submit your payroll tax returns to the relevant state or territory revenue office. Returns are usually filed monthly, quarterly, or annually, depending on the size of your payroll. Pay the calculated taxes by the due date to avoid penalties.

It's crucial to stay updated with the latest regulations and guidelines from the Australian Taxation Office (ATO) or the relevant state revenue office, as tax laws can change. Additionally, consulting with a tax professional can help ensure compliance and accuracy in your payroll tax calculations.