Tax Rate Tax Rate - The payroll tax rate is a legislated figure. It is applied to the net taxable Victorian wages to determine the Total Tax payable. Tax Rate Type Code Tax Rate Type Code - The Tax Rate Type Code defines the type of rate that is being applied. Allowances Allowances - Generally, allowances are taxable in full even if paid to compensate an employee for an actual expense that may be incurred in relation to work, for example, tea money or a uniform allowance. This is the case even if the allowance is paid under an industrial award or an employment agreement. The only exceptions are: * Motor vehicle allowances; * Accommodation allowances; and * Living away from home allowances. For each of these types of allowances, a range of factors need to be considered to determine the extent to which they are taxable. Further SRO References - see also Ruling PTA-005 "Exempt Allowances: Motor vehicle and accommodation" and Ruling PTA-011 "Allowances and Reimbursements" on the SRO web site. Fringe Benefits Fringe Benefits - Even though the FBT year runs from 1 April to 31 March and the payroll tax Annual Reconciliation year runs from 1 July to 30 June, the Payroll Tax Act 2007 deems the amount of fringe benefits declared in the FBT return as if it was for the payroll tax financial year. This is on the basis that both periods are twelve months. Taxability The definition of wages for payroll tax purposes, includes fringe benefits as defined in the Fringe Benefits Tax Assessment Act 1986 (FBT Act), but does not include tax exempt body entertainment fringe benefits. Employers should gross up all fringe benefits (both Type 1 & Type 2 benefits) by using only the Type 2 factor of 1.8692. If you provide fringe benefits to your employees in more than one state, you must declare the Victorian component of the fringe benefit amount. Victorian Component Determination You must declare the portion of fringe benefits which relate to Victoria. If you are unable to accurately determine the Victorian component of your fringe benefits, you can declare the amount based on the proportion of your total Victorian wages (excluding fringe benefits) to your total Australian wages (excluding fringe benefits). For example, if your Victorian wages were half of your Australian wages, you would also declare half of the value of your fringe benefit amount grossed up by the Type 2 factor as fringe benefits subject to payroll tax in Victoria. Non Taxable Fringe Benefits The following benefits are exempt from payroll tax: Any benefits that are exempt under the FBT Act; A tax-exempt body entertainment fringe benefit arising in respect of entertainment expenses incurred by an employer who is wholly or partially exempt from income tax or who does not derive assessable income from the activities to which the entertainment relates Any benefit that is prescribed by the regulations to the Payroll Tax Act 2007 as not to be a fringe benefit for the purposes of payroll tax. (Currently no benefit has been prescribed) Note: Any benefit with a nil taxable value for FBT also has a nil value for payroll tax. Fringe Benefit Definition A fringe benefit is a benefit provided by an employer, an associate of an employer, or by a third party (under an arrangement with an employer), to an employee, or an associate of an employee in relation to employment. Fringe Benefit Classification The FBT Act classifies benefits into: - airline transport fringe benefits; - board fringe benefits; - car fringe benefits; - car parking fringe benefits; - debt waiver fringe benefits; - expense payment fringe benefits; - housing fringe benefits; - living-away-from-home allowance fringe benefits; - loan fringe benefits; - meal entertainment fringe benefits; - property fringe benefits; and - residual fringe benefits. Fringe Benefit Inquiries Questions specifically about the FBT Act should be directed to the Australian Taxation Office (ATO), Telephone: 13 28 61. Total Tax Payable Total Tax Payable - This figure is related to the Employer or Group if the employer is a Designated Grouped Employer reporting on behalf of Scheduled Members (DGESM). It represents the amount of Gross amount of Payroll Tax that is payable, before any Payroll Tax that has previously been paid has been subtracted. This field can either be derived from the Gross Taxable Victorian Wages, or manually entered. Gross Taxable Victorian Wages Gross Taxable Victorian Wages - Gross Taxable Victorian Wages related to the Employer or Group if the employer is a Designated Grouped Employer reporting on behalf of Scheduled Members (DGESM). These are the total wages taxable under Victorian legislation before subtraction of the allowable deduction. Taxable wages for Victorian payroll tax purposes are broken up into components for the reconciliation. Further SRO Reference - see Revenue Ruling PTA-001 "Victorian payroll tax liability for wages paid by an employer" on the SRO web site. Deduction Deduction - A deduction is pre-populated on the monthly return lodgement. If the employer's wages for that month are less than the deduction amount, no tax is payable for that month. The deduction amount that is not claimed in a month is included in the reconciliation when the total actual deduction is calculated. For Payroll Tax groups, if there are no members that have wages consistently greater than the monthly deduction, the group can be changed to a scheduled group if required. With the exception of Ordinary group members and those customers with a 'deduction denied' indicator, the prepopulated deduction can be amended. Net Taxable Victorian Wages Net Taxable Victorian Wages - Net Taxable Victorian Wages is the amount upon which Payroll Tax is calculated. It is derived from the Gross Taxable Victorian Wages less the deduction. Salaries / Wages Salaries / Wages - Taxable wages and salaries are the gross wages and salaries paid including any PAYG (Pay-as you-go) withholding amounts or other deductions made by an employer on behalf of an employee. Salaries and wages include payments for overtime, penalty payments, sick pay, holiday pay and leave loadings. Contractor Payments Contractor Payments - Under certain circumstances, payments to contractors are taxable. The payments are usually taxable where the contractor: - provides essentially labour services; and - works exclusively or primarily for one principal. The provisions relating to contractors deem such contractors to be `employees` and deem payments made to them to be wages. The term `contractors` is a generic one, and includes sub-contractors, consultants, outworkers and so on. The provisions apply regardless of whether the contractor provides services through a company, trust, partnership or as a sole trader. Exemptions In practical terms, the contractor provisions initially capture all contracts for the performance of work. However, the provisions contain six exemptions, and if any one of the exemptions applies to a particular contract, the payments under that contract will not be taxable. The six contractor exemptions are: - the contractor provides services to the principal on no more than 90 days in the financial year; - the contractor engages other labour to perform work under the contract; - the provision of labour is ancillary to the provision of materials and equipment under the contract; - the services provided by the contractor are not ordinarily required by the principal and the contractor ordinarily renders such services to the public generally; - the services are of a kind ordinarily required by the principal on less than 180 days in the financial year; and - the contractor ordinarily renders services of that type to the public generally in that financial year. Non Taxable Payments In addition, payments to the following classes of contractors are not taxable even if none of the six exemptions applies: - owner-drivers; - insurance agents; and - door-to-door sellers. Further SRO References on the SRO web site, see also Rulings GEN.001, PTA-006 "Payroll tax exemption for payments to owner-drivers" PTA-007 "Contractor Provisions - Door-to-door sale of goods" PTA-014 "What constitutes a day's work?" PTA-018 "Contractor deductions" PTA-019 "Contractors - Labour and non-labour components" PTA-020 "Contractors - 180 day exemption" PTA-021 "Exemption for contractors ordinarily rendering services to the public" PTA-022 "Contractors - Services not ordinarily required" PTA-023 "Contractors Engaging Others" PTA-033 "Contractors - Services ancillary to the supply of goods" Bonuses / Commissions Bonuses / Commissions - Bonuses - A bonus is a payment made in addition to an employee's normal wage or salary. Bonuses are usually paid as an incentive or reward for extra or outstanding service. Bonuses are always taxable. Expatriates, who have worked in Victoria, may receive bonuses overseas paid by an overseas parent company. Bonuses received overseas (often as a result of the company's or group's performance) are subject to payroll tax to the extent that they relate to a period in which the expatriate worked in Victoria. Commissions - Commissions are generally payments based on achievement and are usually calculated on a percentage basis. Commissions paid to employees are always taxable, whether they are the sole method of remuneration or are paid in addition to a basic wage or retainer. (The retainer or wage is also always taxable.). Further SRO References - see also Rulings GEN.01, PTA-002 "Expatriate employees" on the SRO web site. Directors Fees Directors Fees - All fees paid to directors, irrespective of whether they are working or non-working directors, are taxable. Termination Payments Termination Payments - Terminations payments generally constitute wages for payroll tax purposes. These include: * a payment made in consequence of the retirement from, or termination of, any office or employment of an employee. This includes; (i) unused annual leave and long service leave payments; (ii) employment termination payments, within the meaning of section 82-130 of the Income Tax assessment Act 1997 (ITAA), that would be included in the assessable income of an employee under Part 2-40 of the ITAA; transitional termination payments, within the meaning of section 82-10 of the Income tax (Transitional Provisions) Act 1997 and any payment that would be an employment termination payment but for the fact that it was received more than 12 months after termination; * amounts paid or payable by a company as a consequence of terminating the services or office of a director; * amounts paid or payable by a person taken to be an employer under the contractor provisions as a consequence of termination of the supply of services by a person taken to be an employee under those provisions. Unused annual leave and long service leave All unused (accrued) annual leave and long service leave paid to an employee upon termination of the employee's services (including a bonus, loading or other additional payment relating to that leave) is subject to payroll tax. Unused sick leave paid upon termination of employment forms part of an employment termination payment and is considered in the following section. Employment Termination Payments Employment termination payments may include: * payments for unused sick leave or rostered days off * payments in lieu of notice * ex gratia payments or 'golden handshakes' * an employee's invalidity payment (a permanent disability, other than compensation for personal injury), and * certain payments after the death of an employee. Genuine redundancy payments and early retirement scheme payments A payment arising from the termination of employment may constitute either a genuine redundancy payment under section 83-175 of the ITAA or an early retirement scheme payment under section 83-180 of the ITAA. Such payments are exempt from payroll tax to the extent that they are exempt from income tax. Further SRO References See also Rulings GEN.001, PTA-004 "Termination payments" Shares / Options Shares / Options - Before 1 July 2007 the value of shares and options granted to employees was not subject to payroll tax. However, from 1 July 2007 the value of an employer's contribution to any grant of a share or option to an employee or deemed employee, a director or former director, member (or former member) of the governing body of the company is subject to payroll tax. The granting of a share or an option occurs if a person acquires a share or (in the case of an option), a right to the share. A value of the share or option becomes liable on the "relevant day". The employer can elect to treat the relevant day as either the date that the share or option is granted to the employee, or the "vesting date". The vesting date for a share is the date when any conditions applying to granting the share have been met and the employee's legal or beneficial interest in the share cannot be rescinded. The vesting date for an option is the earlier of either one of two dates: * when the share to which the option relates is granted to the employee, or * when the right under the option to have the relevant share transferred, allotted or vested is exercised by the employee. If the grant of a share or option constitutes wages, the amount of the wages is the market value of the share or option on the relevant day, less the consideration (if any) paid or given by the employee for the grant (excluding consideration in the form of services rendered), as determined in accordance with the Commonwealth income tax provisions. The employer may reduce the taxable wages declared by the value of any previously declared share or option value, if the grant of a share or option was rescinded because the vesting conditions have not been met. However, this reduction in the taxable wages would not apply in circumstances where the employee decided not to exercise the option. If the grant of a share or option is withdrawn, cancelled or exchanged before the vesting date for some valuable consideration other than a share or option, the date on which that occurs is deemed to be the vesting date and the taxable amount is taken to be the value of the consideration. It is sometimes necessary to determine the correct jurisdiction for payroll tax liability in the case of employment in multiple jurisdictions. In respect of shares or options, the payment is deemed to be in the state or territory of registration or incorporation of the company in which the share or option is granted. The granting of a share or option, which is classified as a fringe benefit under the FBT Act is not treated as a fringe benefit, but rather as wages for payroll tax purposes. Shares/Options Offset Employers are able to offset the value of any over declared shares or options from a previous financial year by under-declaring the value in the current financial year. It should be noted that the Shares/Options field can only take positive amounts, so if the ultimate figure is negative then the Salaries/Wages field will need to be reduced by the over-declared amount and provide offset figures in the comments field on the declaration page. This scenario may result where shares or options are granted to an employee that may have certain conditions attached to them that the employee needs to meet in order to have the shares or options allocated to them, such as performance targets. If the employee does not meet the criteria and the employer has declared the taxable value at the granting date, the employer will need to offset the over-declared amount, rather than seeking a refund. However, no reduction is available if options expire merely because they were not exercised by the relevant date or because the person fails to exercise his/her rights in respect of a share or option. Other Taxable Payroll Other Taxable Payroll - This includes any other taxable wages paid or payable, including commissions paid to insurance or time-payment canvassers or collectors. Return ID Return ID - An SRO generated identifier which is specific to a customer and lodgement period. Superannuation Superannuation - All employer superannuation contributions are taxable including: 1. All compulsory contributions made as a result of the Superannuation Guarantee legislation; and 2. All superannuation contributions made by an employer, where such contributions are made under a `salary sacrifice` arrangement with the employee. An exception applies to those contributions made on behalf of those employees whose wages are not taxable (i.e.maternity and adoption leave). Deduction Variation Reason Deduction Variation Reason - The pre-populated deduction amount can be changed in the following circumstances: (1) Change in Employer Type - Employer Types can be Designated Group Employer, Ordinary Member or Non Group Employer.Ordinary group members are not entitled to claim the deduction and therefore will not be given the option to amend the deduction, (2) Change to Interstate Employment - Commencing or ceasing employment in states other than Victoria will change the eligible deduction entitlement, (3) Actual wages used in Calculation - For an interstate employer, the deduction shown on monthly returns is based on that employer's (or employer group's) estimated Victorian and Australian wages for that year (as disclosed in the previous Annual Reconciliation or on the payroll tax registration form for new employers). Alternatively you can amend the deduction amount based on your actual wages for that month, or (4) Deduction deferred until Annual Reconciliation - Employers that wish to claim the deduction on their Annual Reconciliation only, rather than on their monthly return lodgements Deduction Variation Comments Deduction Variation Comments - Supporting comments must be provided for the following two deduction variation reasons to facilite the change to employer records by the SRO: (1) Change in Employer Type - details should include the date of change and group details (if applicable), (2) Change to Interstate Employment - details should include the Interstate start date and amended estimates (Victorian and Australian) or Interstate cancellation date. PTMRVIC Lodge Request [Abstract]