The grouping of commonly controlled businesses, corporations and employers due to the common use of employees has long been a concern of growing business owners. It has given many surprises to business owners who, for example:
- have reached the taxable wages threshold without realising;
- engaged contractors who do not fall within the exemptions in the relevant Payroll Tax Act (and who then consequently have taxable wages in excess of the relevant threshold);
- have separate business structures for different businesses which have common directors or shareholders;
- use employees across a number of businesses which they own – e.g. bookkeepers, waiting staff, sales assistants;
- have shared premises – e.g. a head office;
- have lent money to related parties.
But all is not lost if you or your clients fall within any one or more of these examples. There are a number of ways that payroll tax registration, audit or assessment can be dealt with.
BEFORE YOU EVEN HEAR ANYTHING FROM THE REVENUE OFFICE
Full disclosure is the best option. If you think you or a client may meet the threshold for taxable wages, undertake your own audit of the circumstances and determine whether the threshold is in fact met or if it is close to being met.
We can assist with this by providing an analysis of entities which the Commissioner may seek to group on the basis of the provisions of the relevant Payroll Tax Act.
Taking this step and registering as soon the threshold is reached will avoid any issues down the track and will avoid any penalties or interest which may be imposed by the Revenue Office.
AFTER YOU REACH THE THRESHOLD BUT HAVE NOT HEARD FROM THE REVENUE OFFICE
If you are concerned that the threshold may have been reached but you have not registered for, or been paying, payroll tax, you can take steps to register and disclose to the Revenue Office that payroll tax hasn’t been paid, when it should have been.
The greatest benefit in making this disclosure to the Revenue Office is that penalties and interest may be waived or mitigated by the Revenue Office for disclosure being made without intervention of the Revenue Office (i.e. by an audit or investigation).
We can assist in this step by reviewing structures to determine which entities need to be registered for payroll tax and which entities may be grouped under the relevant Payroll Tax Act. If a group is formed, we can also assist in making an application to the Commissioner to exclude entities from the group. If a group is formed, not all is lost as there may be arguments to be made as to why the entities operate independently of each other and therefore should be excluded from the group.
WHEN YOU GET A QUESTIONNAIRE OR NOTICE OF AN AUDIT
There are many ways in which the Revenue Offices are unable to uncover entities which should be registered for payroll tax and/or part of a group. The most readily available of these methods is though a search of ASIC’s records to ascertain the directors and shareholders of companies.
The first step that is usually taken is for a questionnaire to be completed which, when completed, will provide information to the Revenue Office as to the business ownership, operations and employees. Completing the questionnaire with accurate information and responses is critical to ensure that any grouping or assessment reflects the actual circumstances. Also, if information is found by the Revenue Office to be incorrect the Revenue Office may decide to impose penalties at a higher rate than if the information was correct.
WHEN AN ASSESSMENT IS ISSUED
If an assessment notice is issued as the result of a response to a questionnaire or an audit, there is an objection process which is available to object against the assessment. There are strict timelines for lodging objections to assessments from Revenue Offices – if the deadline is missed (in Queensland the timeframe is 60 days after the date that the assessment is given) then no objection can be made.