RSM Australia

Payroll tax update for WA

Payroll tax threshold

The Western Australian payroll tax threshold went from $750,000 to $800,000 on 1 July 2014. Plans to raise it to $850,000 have been delayed to 1 July 2016 (at this stage!).

From 1 July 2015, a gradual diminishing of the payroll tax exemption threshold will be introduced for payrolls between the current exemption thresholds of $800,000 up to $7.5m. For payrolls of $7.5m and above, payroll tax will be payable (at the current rate of 5.5%) on an employer’s entire payroll,with no exemption threshold being granted. This is a change from the current approach, where all employers are exempt from payroll tax on the first $800,000 of payroll, regardless of their size.

Charities

The state government has sought to restrict the availability of exemptions for state taxes in response to the 2012 decision of the WA State Administrative Tribunal in Chamber of Commerce and Industry of Western Australia Inc v Commissioner of State Revenue [2012] WASAT 146.  

Under a bill currently before the legislative council in Western Australia, organisations established and carried on for the promotion of trade, industry or commerce would only be entitled to an exemption for stamp duty, land tax and payroll tax if the sole or dominant purpose of the organisation is the relief of poverty, the advancement of education or the advancement of religion.

We recommend review in the current constitution and business to determine whether the exemptions are still available.

Payroll tax planning

OSR is active in auditing businesses in WA, placing particular emphasis on the status of employee/contractors the broad grouping provisions that can apply. 

Opportunities still exist, however, for businesses to legitimately reduce their payroll tax liability through careful review of their arrangements.

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