Dealing with payroll tax in Australia can be technical because thresholds and exemptions vary in each state. To prevent inaccuracies, it is important to be mindful of the following issues:
- Incorrect calculation of the taxable wage threshold
- Failure to properly classify employees
- Failure to account for salary sacrificed amounts
- Failure to account for exempt payments
- Incorrectly applying different tax rates
- Failure to properly report and pay payroll tax
- Failure to keep accurate payroll records
- Failure to stay current with payroll tax legislation
1. Incorrect calculation of the taxable wage threshold
Payroll tax is only applied to wages above a certain threshold, which varies by state. If the threshold is incorrectly calculated, it can result in either underpayment or overpayment of payroll tax.
2. Failure to properly classify employees
Payroll tax applies differently to different types of employees, such as full-time, part-time, and casual workers. It is important to properly classify your employees in order to accurately calculate payroll tax.
3. Failure to account for salary sacrificed amounts
If an employee salary sacrifices part of their wage, this amount may be subject to payroll tax. It is important to properly track and report salary sacrificed amounts to avoid incorrect calculation payroll tax.
4. Failure to account for exempt payments
There are certain types of payments that may be exempt from payroll tax, such as termination payments and some types of bonuses. If these payments are not properly accounted for, it can result in overpayment of payroll tax.
5. Incorrectly applying different tax rates
Different tax rates may apply depending on the location of the employee and the type of work they do.
6. Failure to properly report and pay payroll tax
Employers are required to self report and pay payroll tax on a regular basis, typically monthly or quarterly. If this is not done correctly, it can result in penalties and interest charges.
7. Failure to keep accurate payroll records
Accurate and up-to-date payroll records are essential for properly calculating and reporting payroll tax. If these records are not kept, it can be difficult to correctly calculate payroll tax and may result in errors.
8. Failure to stay current with payroll tax legislation
Payroll tax legislation is subject to change, and it is important for employers to stay up-to-date with any changes that may affect their payroll tax obligations. Failure to do so can result in errors and non-compliance.
At Applied Education we cover everything from beginning your career in payroll (Payroll Administration Course, Salary Packaging Course); through to becoming a professional Bookkeeper (Certificate IV in Accounting and Bookkeeping); and acquiring a Payroll Certification (Diploma of Payroll or Payroll Administrator Skill Set).
If you are looking to re-skill or up-skill but unsure of which course best suits you, get in touch with one of our consultants today and we will endeavour to help you.