In South Australia (SA), payroll tax works in a similar way to other state or territory taxes, but it's important to understand the different rates, thresholds and exemptions.
Payroll tax is a state tax based on the total sum of Australia-wide wages you pay your employees annually.
In this guide, you'll learn when you need to register for payroll tax in SA, key rates and thresholds, and any exemptions that might affect your business.
What is the payroll tax rate and threshold in South Australia?
The payroll tax rate in South Australia varies depending on the total annual wages you pay your employees. The threshold is $1.5 million, so if your wage bill is below that, you don't need to register.
If your business pays between $1.5 and $1.7 million in wages, the tax rate is on a scale between 0% and 4.95%, and you can calculate your rate online.
If the total is more than $1.7 million, your payroll tax rate is automatically 4.95%.
How is payroll tax calculated in South Australia?
Payroll tax in South Australia is calculated based on the total taxable South Australia wages you pay your staff per year.
As an employer, you're eligible for a deduction of a maximum of $600,000 annually, or $50,000 a month, from total gross wages. Every employer is entitled to the deduction, but the amount may vary if you're employing staff for part of a year, your business is one of a group, or you employ staff in other states.
This calculation finds your taxable South Australian wages, which you multiply by your payroll tax rate to get your payroll tax to pay:
Payroll tax payable = (Gross taxable wages - eligible deduction) x tax rate
When's payroll tax due in SA?
Payroll tax is due in SA on the 7th of each month after wages are paid. This means the payroll tax for wages paid in February will need to be paid by 7 March.
Annual reconciliation for South Australian businesses
Annual reconciliations for South Australian businesses is part of good payroll management. All registered employers need to lodge reconciliations at the end of the financial year by 28 July.
For this annual reconciliation, you'll need to check you paid the correct amount of payroll tax throughout the year, and fix any overpayment or underpayment. You'll also confirm your status as a registered employer.
You don't need to lodge a separate monthly return for June as this will be included in your annual reconciliation.
What payments are exempt from payroll tax in South Australia?
Some payments are exempt from payroll tax in SA. These exemptions are based on the type of employer or the type of wage. Some exemptions are automatic, and for others, you'll need to apply.
Exempt employers include the Australian-American Fulbright Commission, consular and non-diplomatic representatives, local governments, state governors, trade commissions and the War Grave Commission.
You can apply for an exemption if your organisation is a university, a childcare centre, a training or education organisation, in film production, a kindergarten, a non-profit organisation or a public or non-profit private hospital.
Some employee wages are also exempt from payroll tax. These include wages paid to apprentices, indigenous people paid under a community development program, payments to employees absent due to obligations to the defence forces, JobKeeper payments, maternity and adoption leave payments, and wages to staff who were away as volunteer emergency workers.
South Australia employer groupings for payroll tax
In South Australia, employer groupings for payroll tax apply to people who own two or more businesses. If this is the case, you may need to calculate the payroll threshold and tax rate based on the wages paid in all your businesses, rather than filing separately.
Businesses may also be grouped if they share employees or are financially dependent on each other. So, if you own one business that pays $800,000 in wages and another that pays $900,000, your total wages are $1,700,000 and you'll have to register for and pay payroll tax.
Revenue South Australia compliance
Revenue South Australia is a body set up to ensure compliance with taxes, by auditing and investigating suspicious activity and non-compliance.
It's vital to understand your obligations and ensure you're compliant with Revenue South Australia. Make sure you keep detailed financial statements, and stay on top of the dates to register, file and pay any taxes.
How to register for payroll tax in South Australia
You can register for payroll tax in South Australia online, through Revenue South Australia.
You need to register as soon as your company's annual wage payments hit the $1.5 million threshold. The monthly threshold is $125,000, and it's recommended that you register if your wage bill reaches this during any month.
Penalties for late or failed payroll tax payments
Penalties for late or failed payroll tax payments include:
Default assessment
A default assessment will be generated if you don't file your monthly payroll tax or otherwise meet your obligations on time. This assessment will be based on your previous payroll report. If you haven't filed previously, it'll be based on the information you provided when registering.
Penalty tax
Penalty tax of 25% may also be added to your default assessment. This will incur interest at the market rate plus 8%.
South Australia payroll tax FAQs
Do you pay payroll tax on superannuation payments in South Australia?
Yes, you pay payroll tax on superannuation payments in South Australia. Contributions to employer-funded superannuation schemes are classed as wages.
Does salary sacrifice reduce payroll tax?
Salary sacrifice (where an employee agrees to exchange part of their salary for a non-cash benefit, like a car or pre-tax superannuation contribution) will only reduce payroll tax if the employee benefit is non-taxable. When the benefit is taxable under the Fringe Benefits Tax (FBT) Act 1986, payroll tax still needs to be paid.
Don't be lax on your payroll tax obligations
As an employer, it's important to avoid tax penalties by understanding and keeping up-to-date with your South Australia payroll tax obligations.
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Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.