Stamp duty and payroll tax are imposed by the various State and Territory Governments.
Stamp duty is a State and Territory tax imposed at either a fixed or at an ad valorem rate on the value of the transaction involved.
Since 1997 New South Wales, Victoria, Tasmania, the ACT and Queensland have co-operated to rewrite their legislation in an attempt to achieve uniform legislation.
Stamp duty will in most cases apply to the GST inclusive amount of the consideration.Stamp duty imposes tax on certain transactions and documents.Duty
is charged on a transfer of, and certain other dealings in, dutiable property.
Dutiable property is broadly defined and includes land, goodwill, intellectual property, partnership interests, and certain dutiable shares, units in unit
trusts and interests in dutiable property.Other transactions which may be dutiable include declarations of trust, agreements for sale or transfer,
surrenders and foreclosures.
Stamp duty is levied at different rates depending on the nature of the property assessed to duty.Note that in the case of corporations and unit trusts
which hold substantial land, the land conveyancing rates will apply on transfers of shares or units in what are termed “land-rich” corporations and
unit trusts.The clear intent is to ensure that the higher duty on the transfer of land is not avoided by transferring shares or units in land-holding
entities, rather than the land itself.
Stamp duty is also imposed on other commercial transactions such as mortgages, leases, rental or house agreements and insurance contracts.The rates and
assessability will vary from state to state.
When making agreements for the transfer of property it is important to consider the stamp duty costs that may be involved.Although there are various capital
gains tax concessions for the transfer of property between related entities this does not mean that there will be no stamp duty payable on the transfer.
In their 2016-17 state budgets, Victoria, NSW and Queensland all introduced stamp duty surcharges of 3 to 4% on foreign residents purchasing residential
All state governments are committing more resources to combatting tax avoidance of stamp duty and payroll tax.
Payroll tax is a State or Territory based tax imposed on employers who pay wages in excess of certain tax-free thresholds.
There are considerable differences between the different States and Territories in the application of payroll tax.The rates of tax vary from 4.75 per cent
in Queensland to 6.85 per cent in the ACT.The tax-free threshold varies from $625,000 in Victoria to $2,000,000 in the ACT.
Employers should be aware of various anti-avoidance measures, including those dealing with contractors and group related employers.
The definition of ‘wages’ in Payroll Tax legislation is very broad and is not restricted to wages or salaries.
The term ‘wages’ includes:
- Employer (pre-tax) superannuation contributions including superannuation guarantee payments, salary sacrifice contributions, from 1 July 2007 (1 July
2009 in WA), the value of non-monetary contributions and superannuation contributions to defined benefit funds;
- Appropriately grossed up value of fringe benefits, within the meaning of the Fringe Benefits Tax Assessment Act 1986 (Cwlth) (FBT Act);
- The value of shares and options granted to employees, directors, former directors and some contractors;
- Payments to some contractors;
- Payments by employment agencies arising from employment agency contracts;
- Remuneration paid by a company to or in relation to company directors and employment termination payments and accrued leave.
Note carefully that fringe benefits, superannuation and payments to contractors have some employers exceeding the thresholds without being aware of it.
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From 1 July 2018 the Victorian threshold will be lifted from $625,000 to $650,000.
The above thresholds may be reduced where the company is part of a group and/or pays interstate wages;
- A small business rate of 2.5% is proposed to apply to firms with payrolls between $600,000 and $1 million, then phase up to the general rate of 4.95%
for payrolls above $1.5 million.
Payroll tax rate reduction for regional employers
Eligible Victorian reginal business will see a reduction in the payroll tax rate from 4.85% to 2.425%. in effect, from 1 July 2018, they will pay tax at
half the rate of their Melbourne counterparts, which presents significant cost advantages.
To illustrate the savings, an eligible regional employer with an annual wages bill of $1 million will pay approximately $8,500 less in payroll tax than
a Melbourne based employer with the same size payroll. In comparing employers with annual wages of $2 million, the savings for the regional employer
increase to approximately $32,750 compared to their Melbourne equivalent.
2018 CHANGES PAYROLL TAX RELIEF
A new lower payroll tax rate and threshold will apply as from 1 July 2018. The payroll tax rate for wages between AUD 1.25 million and AUD 2 million will
be reduced to 4%, with the current rate of 6.1% retained for wages over AUD 2 million.
A three-year payroll tax exemption will be provided for wages paid to employees in regional Tasmania where the employer relocates to Tasmania and establishes
its operations in a regional area.
The current payroll tax rebate scheme for apprentices and trainees has been extended until 30 June 2021.
There will be a 12-month extension (i.e. until 30 June 2019), of the 50% payroll tax rebate for businesses employing apprentices and trainees. This rebate
benefits employers of apprentices and/or trainees whose wages are exempt from payroll tax, by reducing the payroll tax payable on the wages of other
employees. The rebate amount is equal to 50% of the wages paid to apprentices and trainees multiplied by the payroll tax rate (4.75%).
A two-year payroll tax rebate will be introduced for Territory businesses which increase the number of Territory residents they employ, or which replace
existing employees who are not Territory residents (e.g. fly-in fly-out/FIFO workers) with new employees who live and work in the Territory. The rebate
will apply in respect of employees hired between 1 May 2018 and 30 June 2020.
New South Wales
The New South Wales’ payroll tax threshold will be lifted from $750,000 to $1 million.
The threshold rose to $850,000 in 2018 – 19 and will then rise in $50,000 increments until it reaches $1 million.
Employers who are not members of a group must register within seven days after the end of the month in which their average weekly payroll first exceeds
1/52 of the relevant annual exemption threshold.
All States provide for the grouping of related or associated businesses, so that their wages are aggregated, and one threshold only applied to the group.
Normally, one group member claims the exemption threshold and the remaining members must pay a flat rate of tax.
Grouping of employers
Under the grouping provisions, two or more employers may constitute a group if:
- They are related bodies corporate within the meaning of the Corporations Act 2001 (Cwth); or
- They use the same employees, or have an agreement for shared use of employees, or an employee is hired by one employer to work in another business;
- The same persons have controlling interests in a number of businesses (whether conducted by persons, partnerships, corporations or trusts); or
- One has a controlling interest in the other (being a corporation) under the tracing provisions.
If an employer is a member of two or more groups, all the members of those groups will constitute one group.
As there are some border-line and definitional issues that vary between the States, use the above information as a guide only.
Areas of concern include what constitutes an employee and an independent contractor.As many businesses have been caught unawares, real care needs to be
Although we make every reasonable effort to get the thresholds and payroll tax rates correct, some State Budgets come out after publication.
For more details refer to the websites listed below:
PAYROLL TAX AUSTRALIA
The Commissioners from Revenue Offices in each Australian state and territory launched the join Payroll Tax website www.payrolltax.gov.au in Adelaide on 25 July 2013.
The website will provide users with easy access to harmonised payroll tax documentation, legislation, state and territory contacts and education opportunities,
A one-stop location for harmonised payroll tax information and payroll tax return
Information required by employer registered in multiple jurisdictions regarding harmonised payroll.
COMMENT ON RECENT DEVLEOPMENTS
Enhanced data matching techniques used at Federal and State level are catching out more employers who fall foul of the grouping provision or engage in
This means paying contracting fees to people (or their entities) who are essentially employees in all but name.
It is understandable that employers do not want to pay this tax which is effectively a disincentive to take on new staff and expand a business.
Having said this some states have a Payroll Tax Rebate Scheme to offer rebates to eligible employers who take on new staff.
For example, the S.A. Government has recently extended their scheme for a further four years.Check the relevant revenue website to see if you are eligible.
An alternative view is that payroll tax is an important part of State Revenue and should be just factored in as a cost of doing business.
For those close to the thresholds, working directors may instead elect to take dividends rather than salaries from companies.
Also, those employers (and their advisors) who think they are just beneath the threshold should carefully study the expanded definition of wages on the
Employers close to the threshold on normal basic wages can expect to come under increased scrutiny.