New pay-roll tax rate in WA


Pay-roll Tax Amendment (Debt and Deficit Remediation) Act 2017 (WA) and Pay-roll Tax Assessment Amendment (Debt and Deficit Remediation) Act 2017 (WA)

The Pay-roll Tax Amendment (Debt and Deficit Remediation) Act 2017 (WA) (the Pay-roll Tax Amendment Act) amends the Pay-roll Tax Act 2002 (WA) and the Pay-roll Tax Assessment Amendment (Debt and Deficit Remediation) Act 2017 (WA) (the Pay-roll Tax Assessment Amendment Act) amends the Pay-roll Tax Assessment Act 2002 (WA). Both came into effect on 14 December 2017.

New Pay-roll Tax Rate

The Pay-roll Tax Amendment Act temporarily (for 5 years from 1 July 2018) introduces a progressive payroll tax rate scale for employers with an Australia-wide wage bill of over $100 million. Employers with a pay-roll of less than $100 million are not affected.

To give effect to the new progressive payroll tax scale, formulas have been devised which take into account factors such as whether the employer operates interstate, as part of a group or for only part of a financial year. Each formula will determine the rate that is applied to the employer’s taxable wages in Western Australia. The rate determined by the formulas is then applied to the employer’s WA taxable wages.

In summary, the overall effect of the formulas is that the payroll tax rate for employers who pay in excess of $100 million (but not more than $1.5 billion) will be 6% and the effective marginal rate of 6.5% will be applied to wages of more than $1.5 billion. The payroll tax reverts to a flat rate of 5.5% on the 1 July 2023.

Nomination of Pay-roll Estimates

The Pay-roll Tax Assessment Amendment Act makes minor supplementary amendments to the Pay-roll Tax Assessment Act to give effect to the changes made by the Pay-roll Tax Amendment Act. Specifically, section 23A will provide a mechanism for interstate non-group employers and group employers to nominate their pay-roll estimates for each progressive pay-roll tax return in each assessment period for the purposes of determining the applicable progressive tax rate.

Conclusion

The WA – Payroll Tax module has been updated to account for the changes implemented by the new Acts.

Organisations should make themselves familiar with the changes, as set out above and as outlined in the compliance register. Policies and procedures should be updated accordingly.