Glossary

Actual periodic deduction – a deduction based on the actual amount of wages that you pay in a period if you only pay wages in one State or Territory and are not a member of a group.

Allowances – These payments are made to employees generally in compliance with award conditions. They occur regularly in the construction industry such as working at heights or in dirty or dangerous conditions. They are generally included in the definition of “wages’ in the payroll tax legislation. However, there are some exceptions such as allowances for travel and accommodation. You need to check under the legislation.

Annual deduction – a deduction that may apply when the amount of taxable wages paid in a year is calculated. If your wages are combined with those of other businesses, only the designated group employer (DGE) can claim this deduction. If the deduction is larger than the DGE’s taxable wages, the excess will be allocated to the group members.

Annual liability – any liability calculated on the annual return, which is greater than the amount of primary tax calculated on the periodic returns lodged within the annual return period.

Annual reconciliation – the return due on 21 July every year that details all the taxable wages paid in that year, to reconcile the sum of the wages recorded in the periodic returns an employer submitted throughout the year.

Annual return – has the same meaning as Annual reconciliation

Bonus – A bonus is a reward to an employee which is above their ordinary wages. For example a Christmas bonus. Unfortunately, bonuses are taxable under the Payroll Tax legislation.

Change of status – Occurs when a certain event requires the employer to lodge a final return to change the employer status, such as the first day the employer:

  • ceases to employ anywhere in Australia
  • becomes a group member or the designated group employee
  • ceases to be the designated group employer or part of a group
  • appoints an administrator (receiver and manager or liquidator), or come to the end of a period of administration.

Commissions – Because commissions are paid to employees as part of their remuneration they are included as “wages” under the Payroll Tax legislation.

Controlling interest – An interest greater than 50%

Contractor payments – Some contractor payments, though not all, are included as “wages” under the Payroll Tax legislation. Each case is different and specialist legal advice must be obtained.

Corporation – See Sections 9 & 57A of the Corporations Act 2001 (Cwlth)

Corresponding law – A similar law under the Payroll Tax legislation of another State or Territory

Deemed employee – persons including partnerships and trusts who the Commissioner of State Revenue deems to be employees of a business.

Default notice of assessment – These are issued when the employer fails to lodge their returns on time. Sometimes the Office of State Revenue will include a penalty or claim some interest as well.

Designated group employer – Where businesses have been grouped only one of them will be entitled to claim the threshold exemption. That business can be appointed by the other businesses in the group or by the Office of State Revenue.

Directors’ fees – Any remuneration paid to directors of a company and includes directors’ fees, wages and salaries, superannuation, allowances, fringe benefits and shares and options. They are all regarded as “wages” under the Payroll Tax legislation and it doesn’t matter if the director is a working or non-working director.

Employee – Anyone who performs work and gets paid for it. It could also include a deemed employee.

Employer – Any person who pays or is liable to pay wages and may include an employment agent.

Employer superannuation benefits – Includes all superannuation benefits paid or payable to a superannuation fund.

Employer’s wages – Almost all payments made to employees in Australia

Employment agent – Any business that hires out workers to perform services for a client on a temporary basis. For example a labour hire company.

Excess deduction – Applies where the deduction is higher than the wages. It is the difference between the Designated Group Employer’s wages and the annual deduction which is the exempt threshold amount.

Exemptions – Wages that are exempt from payroll tax such as wages paid by:

  • Religious, charitable and public benevolent organisations
  • Public hospitals
  • Non-profit private hospitals
  • Schools up to secondary level
  • Non-profit child care centres and kindergartens
  • Local councils and government departments
  • Non-profit health services providers

However, the wages paid must relate to the objects of the organisation.

Fringe benefits – Any benefits under the Fringe Benefits Tax Assessment Act 1986 (Cwlth)

Grouped employers – Businesses that are grouped together for calculation of payroll tax but excluding the designated group employer.

Grouping provisions – Grouping provisions were introduced in the mid-1970s to overcome companies employing some of their employees by different entities to take advantage of the threshold exemption. The following groups are caught under the legislation:

  • Using common employees
  • Commonly controlled businesses
  • Arising from tracing of interests in corporations

Because the grouping provisions are so wide the Office of State Revenue has discretion to exclude a business from being “grouped” if it can be shown that the businesses are sufficiently independent.

Interstate Wages – Any wages paid outside your own State or Territory. However, because payroll tax is calculated on the total wages an employer pays in Australia, total wages must be declared.

Remuneration – Any payment in return for services

Salaries and wages – Almost all payments made to employees are regarded as wages and includes penalty rates, long service leave, holiday pay, sick leave, commissions, superannuation, allowances, fringe benefits, employer contributions to employee share or option schemes and directors’ fees.

Territories – Any territory of Australia namely the Northern Territory and the Australian Capital Territory including Jervis Bay Territory.

Threshold – Has the same meaning as Exemption threshold.

Wages – Has the same meaning as Salaries and wages