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NSW Office of State Revenue Payroll Tax Awareness Program

Jun 27, 2016

Why are we contacting you?

The Office of State Revenue (OSR) is currently undertaking a series of Payroll Tax Awareness Programs as part of our commitment to improve customer service.

Part of the program involves providing payroll tax information to tax professionals in order to assist them to ensure their clients are meeting their payroll tax obligations by 21 July 2016. It highlights common errors found in our compliance activities and provides information on our available online resources.

The 2016 Online Annual Reconciliation is now available.

Last year, 99 out of 100 lodgers used our online service. As it continues to be the most efficient and effective way of managing payroll tax affairs, we strongly encourage you to utilise the available online tools/resources. You can access our Online Services at anytime.

 

Compliance activity

We conduct extensive data matching with other agencies. Last year, this resulted in a payroll tax shortfall being identified in 8 out of 10 audits conducted.

Our compliance program identified $153 million in underpaid payroll tax, which resulted in businesses having to pay additional interest and penalty tax of $32 million.

A review of the audit program results found employers made most errors when calculating their payroll tax liability in the following areas:

Contractors

Contractors vs employees

Confusing employees with contractors. It is essential that before applying the contractors exemptions to workers, businesses properly determine whether the workers are in fact common law employees. Read more about contractors vs employees.

Contractor Exemption – 180 days vs 90 days rule

Claiming the 180 days exemption as an extension of the 90-days rule and/or for extra labour used for peak periods. Read more about the 180 day exemption.

Contractor Exemption – Ordinarily rendering services to the public

Claiming this exemption when the contractor is either not providing those services in the course of conducting a genuine independent business, or when the contractor is providing the majority of their service to that particular business. Read more about rendering service to the public.

Contractor Exemption – Contractors engaging labour

Claiming the exemption when the additional labour engaged do not perform core services of the contract or that they are not engaged directly by the contractor. Read more about contractors engaging labour.

Failing to recognise grouping of employers

Many employers are confused by the payroll tax grouping provisions and fail to recognise that a grouping applies in their circumstances. Read more about grouping.

Other employers may recognise the grouping, but fail to understand how it impacts their payroll tax returns and liability. Read more about incorrectly claiming threshold entitlements.

Failing to include third party payments

Employers often fail to recognise that all amounts paid for the services of their employees need to be included in taxable wages, no matter who pays those wages or to whom they are paid. Read more about third party payments.

Others

Superannuation

Contributions to superannuation made on behalf of an employee, director of a company or deemed employee not being included as liable for payroll tax. Read more about superannuation.

Fringe Benefits

Not including the correct value of taxable fringe benefits under the Commonwealth Fringe Benefits Tax Assessment Act 1986. Read more about fringe benefits.

Apprentices and Trainees

All wages paid to apprentices and trainees are liable for payroll tax purposes (except for non-profit group apprenticeship and traineeship schemes). However employers are sometimes unaware that NSW has introduced specific provisions allowing taxpayers to claim a payroll tax rebate on wages paid to approved apprentices and trainees as recognised by the NSW Department of Industry. Read more about apprentice and trainees.

Interstate Wages, Threshold Entitlement and Nexus Provisions

Employers often overlook that Australian wages comprise NSW wages plus all interstate wages. NSW wages are the wages subject to tax under the Act. Interstate wages are those wages subject to tax in the other Australian States and Territories (jurisdictions) under their equivalent payroll tax legislation.

Payroll tax is payable on an employer’s NSW wages when its total Australian wages exceed the tax-free threshold (deduction amount). Read more about the threshold entitlement.

All wages paid to an employee for one month's service are taxable in one jurisdiction. The nexus provisions determine in which jurisdiction the wage is taxable. Read more about nexus provisions.

Allowances

Employers are sometimes unaware that allowances are generally included as taxable wages. The only allowances that are not wholly taxable are motor vehicle, accommodation, and living away from home allowances. Read more about allowances.

 

What should I do if I find an error?

If any of you have failed to include all liable amounts in their monthly payroll tax returns for the current financial year, you should ensure that these additional amounts are included in your Annual Reconciliation Return (due 21 July 2016).

If you identify that any of you have failed to include all liable amounts in their payroll tax returns for previous financial years, you should contact us to make a voluntary disclosure of those amounts during business hours.

 

Assistance for tax professionals

We provide various payroll tax updates and other forms of assistance to tax professionals to help them ensure their clients correctly return and pay their payroll tax by the due date.

In the coming months, our Customer Education team will be conducting a series of free payroll tax annual reconciliation and state taxes update seminars throughout the Sydney metropolitan area and in regional centres. To find details of upcoming seminars in your area and to register, view the current seminar calendar.

For those unable to attend one of these seminars, our Customer Education team also conduct webinars on particular topics. To find details of upcoming webinars and to register, view the current webinar calendar.

In addition, tax professional groups and industry bodies can arrange to have our Customer Education team present outside of business hours to a local group on a specific topic or topics of interest. To discuss a presentation to your group, contact our Customer Education team on 02 9689 6138 or client.education@osr.nsw.gov.au

Thank you

 

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Author: NSW Office of State Revenue

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