With the introduction of the JobKeeper scheme in 2020 and the commencement of Single Touch Payroll in 2018, businesses employing Australians are required to provide the Australian Taxation Office [“ATO”], with endless amounts of information regarding payroll activities such as the number of employees, gross wages, Pay As You Go [“PAYG”] withholding and superannuation payments.
This payroll information is also being provided by the ATO to various state government agencies including Revenue NSW.
We have seen a number of Payroll Tax review questionnaires being issued by Revenue NSW to businesses to assess their Payroll Tax compliance.
Questions your business should be asking and answering to ensure you’re audit ready if Revenue NSW come calling:
1.Reviewing Payroll Tax
It is important for businesses to review their Payroll Tax returns that have been submitted to Revenue NSW.
Revenue NSW work through the key questions of:
- Was it lodged and is it right?
- Was it paid, and was it paid on time?
Businesses should ask and answer these questions themselves as part of their internal Payroll Tax review.
2. Ensuring you have the right disclosures
Assuming the letter received from Revenue NSW is correct, payroll tax provisions are notoriously difficult.
Guaranteeing you have the right disclosures on your Payroll Tax returns is of utmost importance to ensure you avoid paying too much or too little tax.
With fluctuating thresholds and labour exceptions, this creates a volatile and confusing environment for taxpayers.
Often service entities incorrectly report their income because they have misunderstood their structure leading to the disclosure of incorrect information. Check and double check and if you are unsure please ask us.
3. Participating in Employee Share Schemes [“ESS”]
Was your ESS created with the right structure and with correct ongoing compliance and reporting?
The concept of “grouping” can be tricky. It involves assessing your business entity as well as entities attached to it, to identify if you should be paying multiple or one combined sum of Payroll Tax.
5. Reviewing your Contractors
Do you pay a Contractor?
Payroll tax plays by different rules when it comes to contractors. Companies are generally not subjected to PAYG withholding or compulsory superannuation with contractor payments. However payments, including companies and trusts, are often “relevant contracts” and therefore subject to payroll tax unless an exemption is applied.
Compliance rules set in place can be confusing. Misunderstanding these regulations could result in heavy fines and implications for your business.
If you cannot confidently answer the questions we have outlined please contact your ESV Engagement Partner for help.