The Payroll Tax Act 2007 (NSW) states that payroll is subject to regulation by the NSW Office of State Revenue or in common terms OSR. It is essential for businesses to understand all the aspects of the system and determine the wages that are liable to avoid the OSR from auditing your firm.
The liable payments under the Payroll Tax Act
The liable wages are listed as follows
- The total wage of an employee including superannuation benefits
- The superannuation contribution made by the employees
- Overtime, leave payments, allowances, penalty rates and commissions
- Allowances for accommodation purposes
- Options and shares provided to the employees
- All the payments made on employee termination.
- Any fringe benefits, even those that are subjected to Fringe Benefits Tax Assessment Act 1986.
Payments those are not liable under Payroll Tax Act
The payroll tax act recognizes certain payments made to the employees of an organization and these payments are not liable under the act
- Compensations paid to the workers
- The Goods and Services Tax levied on any contract or wage is excluded from best payroll tax
- Payments that are made to an employee by the court of law in the form of Jury day payments are not liable.
- Any reimbursements made to the employee through receipts and any claimed business expenditures are not liable
There are however two exceptions to the wages that are paid. The first exception is depending on the nature of the organization (religious, charitable) and the second is depending on the nature of the payment (maternity and adoption leave).
There are also certain other provisions included in the Act to stop businesses from making subdivisions into subsidiaries by using a grouping provision that is aimed at considering corporate groups as one single employer.