New South Wales State Budget

Further to the recent announcement of the 2016-17 New South Wales State Budget, amendments to the application of the Payroll Tax Rebate Scheme (Jobs Action Plan) Act 2011, as outlined in the State Revenue Legislation Amendment (Budget Measures) Bill 2016, received Royal Assent on 23 June 2016. These amendments limit the registration of new positions from 31 July 2016 to employers that have 50 or fewer full-time equivalent employees on the date which employment commences. Additionally, for positions registered from 31 July 2016, the amount payable upon reaching the employee's second anniversary of employment is increased from $3,000 to $4,000.

South Australian State Budget

The 2016-17 South Australian Budget was also handed down by the South Australian Treasurer during the month and includes the following changes:

  • The announcement of a Job Accelerator Grant Scheme to encourage South Australian businesses to employ additional full-time, parttime and casual employees, and maintain them for at least 12 months. Businesses that increase their number of South Australian employees will receive a grant for each additional worker employed by them in a new position between 1 July 2016 and 30 June 2018. The grant will be paid at the first and second anniversary date of employment. A Job Accelerator Grant of up to $10,000 ($5,000 each year for two years) for each new Full-Time Equivalent (FTE) job created is available for businesses liable for payroll tax in South Australia with Australian wages of $5 million or less. A Job Accelerator Grant for Small Business & Start-ups of up to $4,000 ($2,000 each year for two years) per new job created will also be available for most businesses that are not liable for payroll tax
  • The extension of the small business payroll tax rebate introduced in the 2013-14 State Budget for an additional four years to 2019-20. The rebate provides payroll tax savings for employers with taxable payrolls that are less than or equal to $1.2 million. Eligibility criteria for the rebate will be unchanged from the rebate that applied in previous years, and
  • Amendment of the Taxation Administration Act 1996 (SA) to clarify that a taxpayer is only required to pay 50 per cent of the primary tax in dispute before an appeal can be lodged (as opposed to 50 per cent of the whole amount of tax assessed inclusive of interest and penalty tax).

Increase in Payroll Tax Threshold (Australian Capital Territory)

The Australian Capital Territory (ACT) Government has released a Determination during the month, increasing the annual payroll tax threshold from $1,850,000 to $2,000,000. This change will take effect from 1 July 2016. The ACT payroll tax rate remains at 6.85 per cent for the 2016-17 financial year.

Payroll Tax Revenue Ruling updates (Victoria and Tasmania)

The State Revenue Offices of Victoria and Tasmania have both released updated versions of Revenue Ruling PTA003 in relation to the payroll tax treatment of fringe benefits in each state. Among other things, the updated rulings remove outdated reference to prior year FBT gross-up rates. These rulings are effective from 1 July 2016.

Failing to pay PAYG Withholding – Director Penalty Provisions

In Deputy Commissioner of Taxation v Panayi [2016] NSWDC 113 the taxpayer unsuccessfully argued against the application of the Director Penalty Provisions in respect of unpaid PAYG withholding liabilities to the Australian Taxation Office (ATO). Under these provisions, liability for payment of a penalty equal to the unpaid PAYG withholding amount will arise for any person who is either designated as a director of the company on the date of the withholding, or has become a director of the company after that date.

Despite claims by the taxpayer that he was unable to take part in management of the company due to illness, and actions taken to liquidate the company shortly after the penalty notices were issued as a means of avoiding payment of the penalty, the Court found that the taxpayer was registered with ASIC as the sole director of the company during the relevant period and was therefore liable to pay the Director Penalty amount in full.