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Payroll Tax Harmonisation in Australia: Benefits and Changes

Learn about the background of payroll tax harmonisation in Australia since 1971, its impact on businesses, and the alignment of tax rates and thresholds. Discover the benefits of consistency in taxable income, exemptions, and anti-avoidance provisions, and the main changes introduced. Track the timeline of implementation and access useful resources for understanding the new legislation.

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Payroll Tax Harmonisation in Australia: Benefits and Changes

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  1. Payroll Tax Harmonisation

  2. Background • Consistency gradually eroded since 1971 • Business faces higher compliance costs, in many cases with no benefit in terms of revenue for the community

  3. Harmonisation - background • All states have been exploring opportunities • NSW & Victoria harmonised on 1 July 2007 • Tasmania to join NSW/Vic on 1 July 2008

  4. Harmonisation is not … • Aligned payroll tax rates • Aligned payroll tax thresholds

  5. Harmonisation is … Consistency in…. • what is taxable • exemptions & rebates • rules for grouping • anti-avoidance provisions

  6. Harmonisation could be … • One-stop shop payments • Single return forms • Single audits • Consistent software

  7. Some of the main changes • Motor vehicle and accommodation allowances • Employee share acquisition schemes into the payroll tax net • Exemption of not-for-profit charities • Exemption of wages paid for maternity and adoption leave • Grouping provisions • Introduction of tracing provisions

  8. Allowances Alignment of vehicle and accommodation allowances with FBT • Claim the ATO’s large car rate • Claim the lowest capital city rate for the lowest salary band

  9. Employee Share Acquisition Schemes • Currently outside payroll tax net in Tasmania • The grant of a share or option to an employee or director will constitute wages

  10. Exemptions • Wages paid to employees of not-for-profit organisations having wholly charitable, benevolent, philanthropic or patriotic purposes, engaged exclusively in that kind of work, will be exempt • Wages paid in respect of maternity or adoption leave will be exempt

  11. Grouping Provisions • Test for grouping through the inter-use of employees is being expanded • Expanded test will capture quasi-outsourcing arrangements • Commissioner’s discretion to de-group will remain

  12. Tracing Provisions • Prevents the avoidance of payroll tax grouping through the use of corporate structures • Determines a ‘controlling interest’ by examining direct and indirect interests.

  13. August 07 Sept - Nov 07 November 07 Jan - Jun 08 July 08 Timetable Govt approval to proceed Draft new PTX legislation Parliamentary approval of new legislation Taxpayer education campaign Harmonised model applies

  14. Education program • Web Site updates • Media Campaign • Update of relevant SRO Publications • Client mail outs and communications with peak bodies

  15. Useful links • NSW legislation: http://www.legislation.nsw.gov.au • Victorian legislation: http://www.legislation.vic.gov.au

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