As a business grows, its wages can approach and exceed the relevant thresholds for payroll tax registration. Now is the time to review the situation and, if the threshold has been exceeded, register for the current and future tax years.
In the context of payroll tax, ‘wages’ generally includes superannuation contributions, grossed up fringe benefits and certain payments to contractors. The threshold varies in each state and territory, ranging from $550,000 in Victoria to $1,250,000 in ACT and NT.
Be aware that registration is measured based on total Australian wages, although pro-rata adjustments are made where the business has employees in two or more states/territories.
Make all compulsory superannuation contributions
While it is necessary to comply with superannuation guarantee requirements on a quarterly basis, now is a good time to ensure that the business has met its obligations. When the ATO reviews the records of a business, it generally does so initially on a financial year basis, with reference to the employees’ earnings as reported on their PAYG payment summaries. Discrepancies may lead to more detailed investigation.
Identify and report fringe benefits tax
As well as paying the appropriate amount of fringe benefits tax (FBT), it is important to ensure that reportable fringe benefits are correctly shown on employees’ PAYG payment summaries. Rates have changed in recent years so make sure you have the most up-to-date information.
Is your business turnover less than $2 million?
If so, consider the range of small business concessions that are now available to be applied on a selective basis. These include all the concessions that were formerly part of the Simplified Tax System (STS), as well as the FBT car parking exemption and the small business CGT concessions (even where the $6 million net assets test is breached).
Some useful tax references guides for businesses
Company tax rates
Type of company
Tax rate
Private or public company
30%
Life insurance company:
- Ordinary class
- Complying superannuation class
30%
15%
Non-profit companies:
- First $416 of taxable income
- Shade-in above $416 up to $915
- Above $915
Nil
55%
30%
Fringe benefits tax rates
FBT year ending
Tax rate
31 March 2006
48.5%
31 March 2007
46.5%
31 March 2008
46.5%
Individual tax rates (not including Medicare levy of 1.5%)
Taxable income
Tax payable
% tax on excess
2007-2008
2008-2009
2007-2008
2008-2009
2007-2008
2008-2009
$6,000
$6,000
Nil
Nil
15%
15%
$30,000
$30,000
$3,600
$3,600
30%
30%
$75,000
$80,000
$17,100
$18,600
40%
40%
$150,000
$180,000
$47,100
$58,600
45%
45%
Peter Bembrick is a partner with accountants and business and financial advisers HLB Mann Judd Sydney
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