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Changes to calculation of Payroll Tax in WA

The way businesses must calculate payroll tax will change in Western Australia as of 1 July this year. 

 

The changes see an introduction of a progressive scale for payroll tax, which operates in a similar way  to the tax scales used to calculate personal income tax.  Put simply, the higher the amount of taxable wages paid, the higher the rate of payroll tax is applied. 

 

The table below outlines the tax rates and tax scale caps:

 

By Leigh Sampson, CFO Bayside Group and Chair of RCSA’s Tax and Finance Working Group

 

The way businesses must calculate payroll tax will change in Western Australia as of 1 July this year.  

 

The changes see an introduction of a progressive scale for payroll tax, which operates in a similar way  to the tax scales used to calculate personal income tax.  Put simply, the higher the amount of taxable wages paid, the higher the rate of payroll tax is applied. 

 

The table below outlines the tax rates and tax scale caps:

 

 

 

There is no impact to small businesses from the change, as they will continue to calculate and pay payroll tax at 5.5%.

 

If a business has annualised taxable wages of $100 million or more however, or is part of a Group that has Australia-wide taxable wages of $100 million or more, the higher payroll tax rates will apply.

 

The preparation of monthly payroll tax returns for submission in WA will be slightly more complicated as a result of the changes. Wages will need to be annualised to determine the payroll tax rate applicable for that month, as opposed to simply using the 5.5% payroll tax rate as was previously the case.

 

 

 

In WA, a tax free threshold applies to taxable wages of less than $7.5 million, the operation of that has not been impacted