Payroll Tax Changes

Potential reduction in your payroll tax liabilities from 1 January 2023

When calculating the QLD payroll tax liability, employers can claim a deduction against their taxable Australian wages (reducing the taxable wages that are then subject to payroll tax). A level of deduction is currently only available to employers with taxable Australian wages of less than $6.5 million, however from 1 January 2023 a level of deduction will be available to employers with taxable Australian wages of less than $10.4 million. This change is affected by the deduction amount being phased out at the rate of $1 for every $7 of taxable wages over the $1.3 million payroll tax threshold from 1 January 2023 (the current phase out rate is $1 for every $4 of taxable wages over the $1.3M payroll tax threshold).

This change will reduce the payroll tax costs for all employers in QLD with taxable Australian wages of less than $10.4M with the actual deduction amounts allowed to be calculated when payroll tax returns are lodged via QRO Online.

Notwithstanding this change in how the deduction amount is calculated, the payroll tax threshold remains at $1.3M and the rates of payroll tax are still determined with reference to the existing $6.5M taxable Australian wages delineation between smaller and larger employers.

Mental health levy will increase payroll tax costs for larger employers from 1 January 2023

From 1 January 2023 a new Mental Health Levy will apply to larger employers in QLD:

• Employers with Australian taxable wages of less than $10 million will not be subject to this levy
• Employers with Australian taxable wages of more than $10 million will be subject to a 0.25% levy calculated on their QLD taxable wages
• Employers with Australian taxable wages of more than $100 million will be subject to a 0.30% levy calculated on their QLD taxable wages

The Mental Health Levy will be calculated as part of the employer’s monthly payroll tax returns (commencing with that for January 2023) and collected via the usual payroll tax payment process.

Payroll tax discount for regional QLD employers to be abolished from 1 July 2023

In addition to the above changes effective 1 January 2023, regional QLD business should also be aware that the 1% payroll tax discount currently in place is scheduled to be removed from 1 July 2023. This discount currently applies to business that have their principal place of business in regional QLD and pay at least 85% of their taxable wages to regional QLD employees. We consider this change to be a backward step in payroll tax policy in QLD and will be undertaking further advocacy on behalf of our clients to have this discount retained and made a permanent feature of QLD’s payroll tax regime.

Should you have any queries regarding the above matters please do contact your usual PVW Partners advisor.