On 21 March 2018, the Pay-roll Tax Assessment Amendment (Exemption for Trainees) Bill 2018 (Bill) was introduced into the Western Australian Parliament and proposes to amend the Pay-roll Tax Assessment Act 2002 (WA) retrospectively from 1 December 2017, to tighten the payroll tax exemption for wages paid to trainees. In particular, this Bill seeks to limit the exemption to new employees who are trainees earning up to $100,000 per annum. According to the WA Department of Finance, the exemption for wages paid to apprentices is not affected by these amendments.
Under the current law, the wages of all trainees paid under an approved training contract with the Department of Training and Workforce Development (Department) are exempt from payroll tax. The current exemption is available to both new and existing employees undertaking training, and there is no upper salary cap at which exemption ceases to apply. The policy rationale behind this was to encourage businesses to hire and train new staff. However, according to the WA Government, a significant proportion of the cost of providing the exemption has been subsidising training of existing workers and immediate changes to the current laws were necessary to re-align the laws with the original legislative intent.
The employers who lodged a training contract for their existing employees with the Department prior to 1 December 2017 will not be affected by these proposed changes. Transitional provisions will continue to provide an exemption from payroll tax for the remaining term of the contract, provided that the employee’s ordinary annual wage did not exceed $100 000 at the time the contract was lodged.