Payroll Tax Support

Andrew

Updated 11 February 2023 17:05

The Payroll Tax support feature is enabled automatically (by default) but there are several additional sections in the application to help you with the configuration and reporting of Payroll Tax.

Location Configuration

On the Location configuration page, you can specify a State for each location:

Where States have been configured, they will be displayed on the location list, as shown below:

For the purposes of Payroll Tax reporting, a child Location will use the state of its parent location if it hasn’t been configured explicitly. Where a location has not been specified for a location, nor its parent location, it will be reported as ‘Unallocated’.

For the example above, all earnings against the ‘QLD store’ location would be reported against QLD for the purposes of payroll tax.

Employee Configuration

By default, all employees are configured to incur Payroll Tax - this setting can be adjusted on the ‘Pay Run Defaults’ page of the Employee Record:

Please note that this setting is tracked historically. That is, once it is updated, it will apply for any future pay runs (but it will not be applied for pay runs that have already been finalised).

Pay Category Configuration

On each Pay Category settings page there is a checkbox that enables you to mark that particular pay category as Payroll Tax Exempt (note if you do tick that option the pay category will display it against the pay category name in the listing you see on that page):

The Payroll Tax Report provides a breakdown of earnings and super that are (a) subject to payroll tax and (b) payroll tax exempt. The reason we show both sets of figures is to ensure you can reconcile the report totals with the figures in other payroll reports.

Reporting

The payroll tax report option is in the list under the 'Reports' heading.

On the payroll tax report page, you can specify whether you want to run the report for a month or the financial year. Remember that report results are based on DATE PAID. You can choose to break down the report data by Employing Entity (if you are using this feature), Earnings location or Employee default location (check out our Payroll Tax Report article for more detail about what each of these mean):

The report will list the wages and super payments broken down by state and will separate out other payments e.g. Allowances, Termination payments where required. Detailed information on the Payroll Tax Report can be found here.

If earnings are split across multiple states in one reporting period

All wages paid to an employee for a month's service are taxable in one jurisdiction (state or territory). This is known as the 'nexus provisions' or 'nexus rules' - each state's Office of State Revenue (OSR) website provides the same explanation, example is here but feel free to check your own state's OSR.

The nexus provisions dictate that if an employee provides services in more than one Australian jurisdiction in a calendar month then payroll tax is payable in the jurisdiction where the employee is based ie. where their principle place of residence is located - NB. the payroll software assumes that the default/primary location for an employee will be in the same state that they reside so the employee's primary location is used for payroll tax reporting purposes.

Currently our Payroll Tax Report does not accommodate the nexus provisions so if your employees are working across multiple states in one reporting period then you will need to manually adjust the figures in your Payroll Tax Report before submitting the information to the relevant OSR.

To do this run the Detailed Activity Report for the reporting period filtered to group by Earnings location, eg...

You can see on screen if there are earnings across multiple states...

... if the earnings are across multiple states that doesn't necessarily mean one employee has worked across multiple states.

To check if any employee has worked across multiple states:

download the report to excel and use sort/filter in the spreadsheet (if necessary) to see which/if any employees have multiple lines
check the state/location for each employee's earnings lines
if all earnings lines for one employee are not located in the same state then you will need to:
- adjust the totals in the report for that employee so that all earnings are reported in that employee's "home" state before lodging your payroll tax data with the relevant state OSR