Payroll tax

This is a tax levied by state governments and paid by employers on their employees’ remuneration, whether in cash or otherwise. The payroll tax base includes the value of some fringe benefits to employees. An employee for the purposes of the Payroll Tax Act 1971 (NSW) is broadly an employee by the common law definition (see chapter 14, Employment).

The rate in NSW is 6.0% from 1 July 2002.

Exemptions

Small payrolls

There is an exemption for small employers with payrolls of less than $600,000 a year. There are complicated provisions to prevent larger employers from splitting up their operation into smaller units to take advantage of this exemption.

Exempt bodies

A number of bodies are exempted from payroll tax on wages paid, including:

religious or public benevolent institutions, for times when the employee is engaged in the religious or public benevolent work of the institution
societies or institutions approved by the commissioner as charitable, for wages paid for charitable work.

A public benevolent institution is one that is concerned with the relief of some aspect of poverty or social distress.

Wages for non-charitable activities paid by these organisations are not exempt from payroll tax, apart from the initial exemption of $600,000.