If you are here to understand how to manage your payroll tax obligations in Western Australia (WA), you are in the right place. This guide will explain everything you need to know, from registration to calculating taxable wages and lodging returns.
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Payroll tax is a state or territory tax charged on the wages paid to your employees. It depends on the total taxable wages you pay. In WA, the revenue raised goes into the state’s Consolidated Fund to support public services like health, education, and safety. It is different from income tax, which is paid by employees themselves.
Payroll tax is a responsibility of the employer, and it is self-assessed, which means that you are responsible for calculating, lodging returns and paying your own tax. Therefore, it is essential to be informed about the correct information and rulings regarding payroll tax in your area.
In 2007, efforts were made to harmonise payroll tax rulings across Australia and most rulings generally apply to all states. However, since payroll tax is administered by each state and territory, it is important for businesses operating in WA to understand the local rules and obligations.
If you pay wages in Western Australia or the Indian Ocean Territories (IOT), you may need to register for payroll tax through Revenue Online. Registration is required when your total Australian taxable wages go over $83,333 in any one month. It’s important to remember that this figure applies to your business as a whole, not just wages paid in WA.
If you are part of a group of businesses, the wages of all group members are added together to see whether the threshold has been exceeded. This means you may still need to register even if your own business is under the limit, because the group total is what matters.
Once you meet the threshold, you must register as an employer within seven days after the end of the month in which you were first liable. When registering, you need to agree to the terms and conditions of use. Delays in registering can lead to penalties, so it’s best to act quickly once you know you qualify.
Register as an employer through RevenueWA - Revenue Online
Exemptions apply to wages paid by certain organisations, including:
If you are an exempt employer, you do not need to register for payroll tax, and the wages you pay are not taxable. Charitable bodies and organisations may also qualify for exemptions, provided they meet specific conditions set out by the State Revenue Office.
Businesses may be grouped for payroll tax purposes. A group is formed,
In a group, only one member, called the Designated Group Employer (DGE), can claim the deductible threshold. The group can nominate the DGE, or if no nomination is made, the State Revenue Office usually selects the member with the highest WA wages.
Although each member must register and lodge returns separately, the group’s tax liability is calculated on the combined wages. All members are jointly responsible, so if one member fails to pay, the others may also be liable.
As mentioned above, the employer is responsible for calculating how much is owed and lodging a return. You can use the payroll tax calculator to estimate your liability. Returns are lodged through Revenue Online.
If your business prefers, you can request to lodge returns less frequently, depending on your estimated annual payroll tax liability:
This system ensures that payroll tax is calculated and paid accurately throughout the year, helping businesses stay compliant.
Annual reconciliation is the process of finalising your payroll tax for the financial year. During the year, an estimated deductible amount is applied to your monthly or quarterly returns.
For interstate non-group employers or designated group employers (DGE), this estimated amount is included in your returns throughout the year. However, if you are a member of a group, you are not allocated an estimated monthly amount.
Once you and your group members have submitted all required wage information by 21 July, the State Revenue Office will complete the reconciliation for you and calculate the actual deductible amount. This process is usually finished by mid-August.
After reconciliation, any differences between the estimated amounts paid and the actual tax due will be adjusted. This may result in either a debit (additional tax to pay) or a credit (refund). These adjustments will be detailed on your Assessment Advice, including how they were calculated and the due date for payment.
In Western Australia, payroll tax is charged at a rate of 5.5% on taxable wages.
A diminishing tax-free threshold applies between:
This means:
The deductible threshold can be adjusted (apportioned) if your business:
Payroll tax must be paid in the state or territory determined by nexus rules - PAYROLL TAX Nexus Provisions.
The calculation of payroll tax liability depends on the employer's status. Given below are the 4 employer types:
For payroll tax purposes, wages include more than just the regular salary you pay your staff. They cover any amount paid or payable to, or in relation to, an employee, whether in cash or in kind. This means that wages can include other forms of compensation:
Follow the link to learn in detail about taxable and non-taxable wages - Wages: Payroll Tax Employer Guide.
Payroll tax in Western Australia is a critical obligation for employers. To remain compliant, businesses must:
With careful management and awareness of WA-specific rules, businesses can avoid penalties, accurately calculate payroll tax, and maintain smooth operations. Staying informed and organised ensures payroll remains a tool for compliance and efficiency, rather than a source of stress.