COVID-19: Payroll Tax relief and what this means for business

4 minute read  04.05.2020 Hamish Wallace, John Riley
To relieve the impact of COVID-19 on businesses and encourage the retention of staff, States and Territories around Australia have announced a variety of payroll tax concessions to help relieve the cash-flow strain caused by COVID-19. We explore some of the key payroll tax measures and what it means for business.

In response to COVID-19, the States and Territories have announced a range of payroll tax measures to help businesses manage some of the challenges COVID-19 has presented. Each state has different timing and requirements. Below we discuss the measures, timing and what it means for businesses across each state.

Victoria

Announced on 21 March 2020 with reimbursements to businesses to start from 27 March 2020.

Businesses with annual taxable wages up to $3 million (determined on an employer by employer basis) will have their full payroll tax liability for the 2019-20 financial year refunded.

Eligible businesses referred to above may also defer paying payroll tax for the first three months of financial year 2020-21 until 1 January 2021.

Eligible businesses must continue to lodge returns and will receive further information from the SRO.

New South Wales

Announced on 17 March 2020 and updated 26 March 2020.

Businesses with total grouped Australian wages up to $10 million will have their annual payroll tax liability reduced by 25% for the 2019-20 financial year.

These businesses do not need to pay payroll tax for March, April and May 2020 but must still lodge their annual reconciliation in July 2020. Additionally, these businesses will have the option of deferring payroll tax payments for an additional three months.

Businesses whose total grouped Australian wages for the 2019-20 financial year are over $10 million, will have the option of deferring the payment of payroll tax for up to six months.

These businesses will not need to make their payment for the March period, normally due on 7 April 2020.

The payroll tax threshold will be increased from $900,000 to $1 million from and including the 2020-21 financial year.

Western Australia

Announced on 16 March 2020 and updated 16 April 2020.

Businesses who pay $7.5 million or less in Australian taxable wages at June 30 2020 will have their payroll tax waived for the period of March to June 2020. This waiver replaces the previously announced deferral.

Employers (or groups of employers) whose annual Australian taxable wages are less than $5 million at 29 February 2020 can automatically claim the waiver through Revenue Online. Employers (or groups of employers) whose annual Australian taxable wages are between $5 million and $7.5 million (inclusive) must apply for the waiver.

Employers (or groups of employers) whose annual Australian taxable wages are more than $1 million and less than $4 million will receive a one-off grant of $17,500.

The one-off grant will be automatically paid by cheque with no application necessary.

The payroll tax threshold will be increased from $950,000 to $1 million from 1 July 2020. This will bring the increase in the threshold forward from the planned date of 1 January 2021.

All businesses affected by COVID-19 can apply for an interest-free payment arrangement and for late penalties to be waived for payroll tax.

Wages paid by employers that are subsidised by the Australian Government's JobKeeper Payment are exempt from payroll tax. This exemption only applies to the part of the wage which is subsidised.

Queensland

Announced on 2 March 2020, updated 17,19 and 24 March 2020 and last updated 1 April 2020.

Employers who pay $6.5 million or less in Australian taxable wages will be refunded two months of payroll tax (for November and December 2019) and do not have to pay payroll tax for a further three months (January to March 2020). Eligible employers will be contacted by the OSR about their refund and tax free period.

Employers who pay more than $6.5 million in Australian taxable wages and have been negatively affected by COVID-19 can apply for a two month refund of payroll tax (for January and February 2020). Eligible employers must apply for the two month refund before 31 May 2020.

In addition all employers can apply to defer their remaining payroll tax payments for the 2020 calendar year.

All employers must apply for the deferral online and must continue lodging returns (without paying). 

Tasmania

Announced on 18 March 2020.

Payroll tax will be waived for hospitality, tourism and seafood industry businesses for 2019-20. Broadly, employers must employ one person who solely or predominantly works in one or more of the relevant industries and the employer must pay at least 50% of their Australian group wages in Tasmania to be eligible.

Other businesses with Australian group wages of up to $5 million will be able to apply, based on the impact of the virus, to have their payroll tax waived for 2019-20. The business must have been adversely affected by COVID-19 during 2019-20. Broadly, businesses must pay at least 50% of their Australian group wages in Tasmania to be eligible.

Additionally, businesses that employ new youth employees (24 years and under) or apprentices and trainees in the building, construction, tourism, hospitality and manufacturing industries and pay payroll tax may be eligible for a payroll tax rebate. For youth employees, rebates are available one year from the date employment commences. For apprentices and trainees, rebates are available two years from the day that the employee's training contract takes effect under the Training and Workforce Development Act 2013.

The Tasmanian Government has also confirmed that it will waive payroll tax on JobKeeper payments made by employers of Tasmanians.

Businesses who have their payroll tax waived do not have to lodge returns for March to May 2020 but must still lodge their annual reconciliation in July 2020.

Businesses will need to apply for the measures online. 

Australian Capital Territory

Announced on 20 March 2020 and updated 1 April 2020.

Employers directly affected by the 'prohibited activities list' will benefit from a six month waiver of payroll tax from April to September 2020. This list includes businesses such as gyms, indoor sporting venues, cinemas and beauty therapists.

All ACT businesses with Australia-wide payroll tax group wages of up to $10 million are entitled to an interest free deferral of their 2020-21 payroll tax until 1 July 2022.

Additionally, payments made under the Commonwealth Government's JobKeeper scheme will not be treated as wages for the purposes of calculating payroll tax.

Businesses must apply online for both forms of payroll tax relief. Further, businesses who defer payment must continue to file their returns. 

Northern Territory

Announced on 17 March 2020.

Eligible employers with Australian taxable wages under $7.5 million can apply for a payroll tax waiver for the March to August 2020 return periods. The employer must have a confirmed listing on the Department of Trade, Business and Innovation (DTBI) Central Hardship Register. This requires that the employer demonstrate it has an annual turnover of $50 million or less and has experienced a reduction in turnover of at least 30% when compared to the same month or quarter in 2019.

Eligible employers with Australian taxable wages over $7.5 million may apply for payroll tax deferrals until 21 September 2020. Additionally, employers must have a confirmed listing on the DTBI Central Hardship Register and demonstrate a reduction in turnover of at least 50% when compared to the corresponding month or quarter in 2019.

Any employer who does not qualify for the above relief can contact the Territory Revenue Office to set up a flexible payment arrangement. Additionally, the due date for payment of March returns has been extended to 15 May 2020.

Businesses must apply to the DTBI to be listed on the register. After listing, the Territory Revenue Office will contact the business. If successful, businesses must continue to lodge payroll tax returns.

South Australia

Announced on 26 March 2020.

Businesses with annual Australian grouped wages of $4 million or less will receive a 6 month waiver of payroll tax (from April to September 2020). No application is required, RevenueSA will notify these businesses through RevenueSA Online.

Businesses with annual Australian grouped wages above $4 million which can demonstrate that COVID-19 has significantly impacted cash flow can apply to defer their payroll tax for 6 months. Payments for the months of April to September 2020 can be deferred until October 2020. These businesses must apply for the deferral.

Payments made under the Federal Government's Jobkeeper support package will be exempt from payroll tax.

All businesses must continue to lodge monthly payroll tax returns. 

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