Payroll Tax Reform
From 1 January 2019, changes to the current payroll tax rates will come into effect. These changes are expected to assist small to medium-sized business by offering them a payroll tax break or reduced rate. Businesses with annual taxable wages of up to $1.5 million are no longer liable for payroll tax and those with taxable wages between $1.5 and $1.7 million will receive a minor benefit from a reduced payroll tax rate under the new arrangement. Below is a summary provided by Revenue SA detailing both the updated rates applicable as of 1 January 2019 and the existing rates in place.
Payroll Tax Rate Change Summary
Despite the minimum threshold increasing from $600,000 to $1.5 million, the deduction entitlement afforded to all payroll taxpayers remains unchanged at $600,000. Therefore, for businesses with total annual taxable wages exceeding $1.7 million this reform has no impact on your current payroll tax obligations both in terms of lodgement frequency and rate applicable. This emphasizes the focus this change has on assisting small to medium business specifically rather than their larger counterparts.
How This Affects You:
For businesses who were previously liable to lodge and pay payroll tax monthly but had estimated annual wages for the 2018/2019 financial year of under $1.5 million, they are no longer required to make monthly returns from 1 January 2019. For example, if your total estimated wages for the 2018/2019 financial year was $1.3 million and you are currently lodging monthly returns, from 1 January onwards you are no longer required to do so. Revenue SA will automatically change your business from a monthly lodgement cycle to an annual cycle in this situation; accordingly, your next lodgement will be the annual return completed in July of each year. If your estimated wages remain below $1.5 million for the 2019/2020 financial year and beyond you can then look to cancel your registration altogether.
For businesses whose annual taxable wages meet or exceed $1.5 million, you will continue to lodge monthly returns as normal with businesses in the $1.5 to $1.7 million total wages bracket benefiting from a reduced rate.