Tax Alert: Payroll Tax Changes South Australia

Effective: 1 January 2019
(Assented to on 25 October 2018).

What has changed?

From 1 January 2019, businesses with annual taxable wages of up to $1.5 million will not be liable for payroll tax, and those with taxable wages between $1.5 million and $1.7 million will benefit from a reduced payroll tax rate.
As these changes come into effect mid-financial year, the 2018-19 financial year will be split into two return periods:

Period 1 1 July 2018 to 31 December 2018
Period 2 1 January 2019 to 30 June 2019

What do employers need to know?

Employers with estimated wages under $1.5 million for 2018-19

From 1 July 2019, you will no longer be required to pay payroll tax in South Australia if your Australia wide wages, or group wages, continue to remain below $1.5 million.

Will you need to continue to lodge monthly returns?
As payroll tax is based on your annual taxable wages, you will need to remain registered for the 2018-19 financial year. If you have advised RevenueSA that your estimated Australia wide wages, or group wages, for the 2018-19 financial year are under $1.5 million, RevenueSA will convert you to an annual cycle so you will not be required to lodge monthly returns for the January 2019 to May 2019 periods.

When can you lodge my 2018-19 Annual Reconciliation?
You will be required to complete the 2018-19 Annual Reconciliation by 22 July 2019. An email will be sent to you once the Annual Reconciliation opens in mid-June.

When can you cancel your registration?
If you expect your 2019-20 financial year Australia wide wages, or group wages, to remain under $1.5 million, you should cancel your registration as part of the 2018-19 Annual Reconciliation. If you cease employing in South Australia before 30 June 2019, please contact RevenueSA.

Employers with estimated wages between $1.5 million and $1.7 million for 2018-19

Will the rate change for my monthly returns?
You will continue to lodge your monthly returns using your current deduction entitlement (now called the ‘exempt amount’). The rate of tax you pay will be automatically calculated when you complete and lodge your returns.
The rate at which payroll tax is applied will depend on your estimated annual wages (for Period 2 between 0% and 4.95%). This will be automatically calculated through the online return process.

The following online calculator can be used to calculate the 2017 -18 financial year and 1 July 2018 to 31 December 2018, with the 2018-19 Financial Year Calculator is currently being developed and is due for release mid December

Will both periods be calculated in my 2018-19 Annual Reconciliation?
When you complete your 2018-19 Annual Reconciliation you will need to provide your, or your group’s, total South Australian and Australia wide wages for the year, together with a split of wages for the two periods (as specified above). Payroll tax payable and the deduction/exempt amount will be calculated based on the proportion of your wages paid in each period.

Employers with wages over $1.7 million for 2018-19

No change. You will continue to lodge your monthly and annual reconciliations returns using your current deduction entitlement (up to $600 000 p.a.).