Have you and your clients investigated all options?
Employees and associated costs are often the largest financial burden faced by SMEs. In an effort to free up funds and assist businesses to survive this turbulent time, several payroll tax measures have been introduced by the state governments as part of their economic relief packages.
Payroll tax expert and founder of Payroll Tax Solutions, Andrew Fricot has assisted us in putting together a summary of the key reforms that have implemented since the commencement of the COVID-19 operating environment. Some states have chosen to provide tax refunds and waivers while others are providing discounts or deferrals on future liabilities. While this summary was accurate at the time of publication, Andrew stated that some of the relief measures have been changing from week to week and it is necessary to visit your relevant government website for up to date information. Links are provided in headers below.
New South Wales
New South Wales Revenue has taken the discount and deferral route. Businesses with total grouped Australian wages of less than $10m for the 2019-20 financial year are eligible to have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July 2020. Wage details but not payment is required for March, April and May 2020.
Meanwhile, all businesses including those with wages over the $10m threshold for the 2019-20 financial year will have the option to defer their payment of payroll tax for up to six months. The deferral will commence with their payment for the March period. More information on this to come.
Furthermore, the $1 million scheduled tax-free threshold increase has been brought forward from 1 July 2021 to 1 July 2020.
The State Revenue office Victoria is providing businesses with relief in the form of refunds. SMEs with wages less than $3m will have their 2019-20 payroll tax paid to date refunded. The eligible businesses must continue to lodge returns but will not be required to make any further payments for the rest of the financial year. The same eligible businesses will also be able to defer any payroll tax payments for the first three months of the 2020/21 financial year until 1 January 2021.
Queensland Office of State Revenue has also offered the possibility of a refund as well as what they have termed a ‘tax holiday’. While all businesses must still lodge their returns, businesses whose wages are $6.5m or less may be eligible for a refund of payroll tax for 2 months (November and December 2019) and a ‘payroll tax holiday’ for 3 months (January to March 2020). Additionally, the eligible businesses may apply for a deferral of payroll tax for the 2020 calendar year.
Businesses whose wages are over this threshold that have been negatively affected by the coronavirus can apply for a deferral of tax for the 2020 calendar year. Additionally, they can apply for a refund of their January and February 2020 payroll tax.
In addition to bringing forward the increase in payroll tax threshold to $1m, the Western Australian Department of Finance announced that the Jobkeeper Payment scheme will be exempt from payroll tax. Furthermore, a tiered approach based on wage thresholds has been implemented. Businesses with $7.5m or less in wages will be able to waive their payroll tax liability from March to June 2020 (automatically applied to businesses under $5m in wages) and can apply to defer lodging and paying returns for the remainder of the 2020 financial year. If total wages exceed $7.5 million by the end of the financial year, deferred payments will become payable by 21 July as part of completing their Annual Reconciliation.
One-off grants of $17 500 have also been made available for employers (or grouped employers) with total annual Australian taxable wages more than $1 million and up to $4 million.
Revenue South Australia announced businesses with wages less than $4m will automatically receive a six-month waiver of payroll tax commencing March 2020 through to August 2020. A deferral of tax is available by application for businesses over this threshold who have experienced COVID-19 related hardship. Monthly returns are still required to be submitted, with no payments to be made.
JobKeeper Payments will be exempt from payroll tax.
The ACT Government’s economic survival package has provided Industries affected by COVID-19 with a six-month waiver of payroll tax commencing April 2020. Businesses with total wages of $10m or less, if eligible, can defer their 2020-21 payroll tax, interest free until 1 July 2022 but lodgements must still be made as per usual.
For more information on these and other measures available to you and your clients, please contact your local Worrells partner for a confidential and obligation free discussion.
Many thanks to Andrew Fricot for his expertise and insights. Andrew has over 15 years' professional experience working as a key spokesperson, advisor and educator in the field of payroll tax, grants and rebates.