Governments throughout Australia have employed unprecedented measures to mitigate both the health and economic shocks to the community from COVID-19.
Contemplating the well-publicised interventions provided to businesses by the Commonwealth Government are measures recently introduced by State and Territory Governments including relief from payroll tax. The criteria for payroll tax relief vary from jurisdiction to jurisdiction and can be summarised as follows:
Employers with annual Victorian taxable wages up to $3 million will have their payroll tax for the 2019-2020 financial year waived. Eligible businesses must continue to lodge returns but do not need to make further payments for this financial year. These businesses can also defer paying payroll tax for the first quarter of the 2020-2021 financial year until 1 January 2021.
New South Wales
Employers whose Australia-wide for the 2019-2020 financial year are no more than $10 million will have their annual tax liability reduced by 25 per cent when they lodge their annual reconciliation, which is due on 28 July 2020. No payment is required for March, April or May 2020. These employers have the option of deferring payments by an additional three months. Employers whose Australia-wide wages for the 2019-2020 financial year are over $10 million have the option of deferring the payment of payroll tax for up to six months. These businesses will not need to make their payment for the March 2020 period, normally due on 7 April 2020.
Australian Capital Territory
Employers operating in industries on the "prohibited activities list" (e.g. entertainment, food and drink) are eligible for a waiver of payroll tax from April 2020 to September 2020. All employers with Australia-wide wages of less than $10 million can defer their 2020-2021 payroll tax, interest free, until 1 July 2022. Employers in the construction industry can apply to defer their payroll tax liability for six months from April 2020 to September 2020. No interest will apply until 1 September 2020.
Payroll tax will be waived for six months for employers with Australia-wide wages of less than $7.5 million where turnover has been reduced by at least 30 per cent. Payroll tax will be deferred for six months for employers with Australia-wide wages above $7.5 million where turnover has been reduced by at least 50 per cent. The existing payroll tax exemption for hiring NT resident employees has been extended to 30 June 2021.
For employers with Australia-wide wages of $6.5 million or less payroll tax paid for November and December 2019 will be refunded. No payroll tax is payable for the January to March 2020 period. Employers can also apply for a deferral of payroll tax for the 2020 calendar year. Employers with Australia-wide wages of more than $6.5 million can apply for a deferral for the 2020 calendar year, and a refund of payroll tax paid for January and February 2020.
For employers with Australia-wide wages of up to $4 million, a six-month waiver applies from April to September 2020. Employers with Australia-wide wages above $4 million who can demonstrate they have been significantly impacted by COVID-19 may apply for deferral of payments due in April to September 2020 until October 2020. Monthly payroll tax returns must still be lodged.
Employers in the hospitality, tourism and seafood industries are exempt from payroll tax for the entire 2019-2020 financial year. Monthly returns for March, April and May 2020 are not required. For all other employers with Australia-wide wages of up to $5 million who can demonstrate their operations have been affected by COVID-19, payroll tax will be similarly waived / refunded. The annual adjustment return for 2019-2020 must still be lodged by 21 July 2020. A 12-month rebate will apply to approved employers who employee new youth employees (aged 24 years or younger) between 1 April and 31 December 2020.
Payroll tax will be waived for March to June 2020 for employers with Australia-wide wages of less than $5 million between 1 July 2019 and 29 February 2020. On application, this extends to companies exceeding this threshold but with expected annual wages of less than $7.5 million. The planned increase in the payroll tax threshold to $1 million will apply from 1 July 2020 (rather than from 1 January 2021). A one-off grant of $17,500 will automatically apply to employers with Australia-wide wages for 2018-2019 of more than $1 million and less than $4 million.
Note that JobKeeper payments received from the Commonwealth are generally regarded as not forming part of Australia-wide wages.