5 Common Payroll Tax Mistakes You May Be Making

By Swish

November 30, 2015


Payroll tax is an ongoing issue for Australian and international employers. It is easy to make mistakes and the penalties for such errors can be quite high. M Squared & Associates have been working with companies on their payroll tax for over 10 years. Today we’re discussing the four most common payroll tax mistakes our employees have found on the job. We hope this information can be useful to you and your business and appreciate any feedback our readers are able to provide.

So where do organisations and employers go wrong with Payroll tax?

1. Companies fail to properly identify employee roles and titles.
This is by far the most common error with payroll tax and it comes in several forms. According to the Office of State Revenue the more common misclassifications are not declaring taxable contractors, incorrectly classifying employees as contractors, and not including superannuation or top up payments to a benefit scheme.

2. Work related and other expenses/exemptions are improperly excluded from reportable salary.
Another common mistake reported is that employers fail to declare interstate wages, incorrectly leave out components of the employee’s reportable salary including but not limited to superannuation payments, motor vehicle allowances, bonuses, etc.

3. Misreporting fringe benefits provided to employees.
According to the Australian Taxation Office fringe benefits are “…benefits either you or an associate, such as your spouse or children, receive because of your employment. You can be a current, former or future employee.” In general an employer should pay payroll tax on the value of the fringe benefit provided to the employee. This is commonly overlooked due to bad reporting processes or unintentionally overlooking benefits provided. Fringe benefits are a complicated piece of payroll taxation and the best thing you can do is consult a professional to assist you.

4. Companies fail to lodge returns by the dates due.
The other main error is either failing to register for pay-roll tax when they should (including not realising that they need to register), or not realising that they are part of a larger “employer group” and that they are either liable for payroll tax when they thought that they were not, or not realising that they should be paying higher levels of payroll tax.

At M Squared we provide tax and business solutions primarily for those in the Oil and Gas Industry who need certainty of outcome and want to work with a specialist who will give a bullet proof decision. We assist employers and employees in making strong financial and taxation decisions. As specialists in the field of payroll taxation we assist in eliminating these common errors from our client’s repertoire. Should you or someone you know need assistance in the fields of payroll taxation please do not hesitate to contact us for a consultation today.

This article was written with reference and direct quotes from the Government of Western Australia’s ‘Common Payroll Tax Errors‘ web page and the ATO’s ‘Reportable Fringe Benefits’ article‘.

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