Payroll tax is a state and territory tax. It is assessed based on your monthly wages paid in total. If you are a member of a group of employers, every member must pay the Victoria (VIC) Payroll tax rate even if one member exceeds the threshold.
Payroll tax threshold in VIC
The monthly threshold for payroll tax in VIC is $58,333, and the annual threshold is $700,000. The rates vary depending on whether you are a regional and non-regional employer. Regional employers enjoy a rate of 1.2125%, while the rate for non-regional employers is 4.85%.
The regional payroll tax rate in VIC was brought in on 1 July 2021, a year ahead of schedule. There was a similar reduced rate for businesses in bushfire areas which will only be applicable until 30 June 2022. However, the wider reduced rate will continue.
Payroll tax and regional employers
Regional employers are classed as businesses that pay 85% of their taxable wages to regional employees. A regional employee is someone who performs more than 50% of their responsibilities within the regional Victoria region.
If you pay monthly, you need to lodge and pay your payroll tax within seven days of submitting your details. If you pay annually, you need to file your annual reconciliation by 21 July. In VIC, employers pay monthly unless an annual payment is approved. If the tax payable for the last financial year and the estimate for the following year is below $100,000, Revenue Victoria may approve annual payments.
Send your monthly returns and pay your payroll taxes to your state revenue office.
How to register for payroll tax
You can quickly and easily register online for Payroll Tax Express (PTX). Once you complete the registration and submit your application, you will receive a receipt number. You should hold onto this in case you need it for future reference. The state revenue office of VIC states it generally takes around 30 days to process the registration, and you will receive a confirmation letter once the process is complete. The letter will contain a unique customer number, and instructions on logging into the PTX service where you can manage and pay your payroll tax.
Simply log in to the service and choose monthly return from the menu to lodge your monthly return. Ensure you select the correct liability period, enter your wages, and lodge the return. Once your return is lodged, the service will offer you payment options. If you do not pay on time, you may be charged a penalty tax and interest.
Taxable wages in VIC
Payroll tax is based on taxable wages, so when you are calculating whether your Australia wages exceed the threshold, you have to consider the gross pay your employee receives before any deductions have been made, not the net pay that lands in their bank account.
Mental health & wellbeing surcharge
This surcharge began on 1 January 2022. If you pay taxable wages in VIC and exceed the annual threshold of $10m, then you must pay the mental health and wellbeing surcharge.
Not everyone has to pay payroll tax. Non-profit organisations are exempt from the payroll tax rate in VIC. It can include charities, religious institutions, healthcare service providers, and non-government nonprofit education institutions catering at or below secondary levels. You can review the details and apply for an exemption if you believe your organisation should be exempt.
How QuickBooks can help
QuickBooks Accounting Software makes running a small business simple. Whether you need accounting assistance with your taxes, payroll solutions, or you never want to miss another deduction. It's a simple, smart solution for small business owners all over the world. You can manage your entire business from one dashboard and ensure your business is as efficient as it is compliant.
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