Recently, the Office of State Revenue has been conducting a significant number of payroll tax compliance audits, particularly involving contractors or grouping.
In our experience, there are a number of common mistakes employers make when remitting their payroll tax returns, including:
- Wages – use gross wages, not net wages.
- Superannuation – all amounts paid into superannuation are liable wages, including salary sacrifice amounts. Only including up to the Superannuation Guarantee Charge will result in an understatement.
- Allowances – claiming an exempt component for motor vehicles and accommodation allowances requires substantiation with log books or records.
- Fringe Benefits – don't use reportable values from employee pay summaries: - use the Type 2 grossing up factor only. - don't forget to proportion to wages in New South Wales if there are interstate employees.
- Not adjusting the threshold – excluding interstate wages when calculating payroll tax results in incorrect threshold allocation and underpayment of payroll tax.
- Third party payments to directors – payments for services by directors are wages even if made to another entity or superannuation fund.
- Contractors – failure to include liable contractor payments (less GST and approved deductions) will result in understatement of payroll tax unless an exemption applies.
- Grouping – payroll tax groups claiming multiple thresholds will result in understatement.
- Apprentices and trainees – to claim the rebate, apprentices and trainees must be registered with the Department of Education and Training.