AU Payroll - Payroll Tax Maintenance

Payroll tax is payable by employers in each state and territory of Australia. The rate at which payroll tax is calculated and the remuneration on which payroll tax is payable can differ between each state and territory.

The Payroll module calculates a pay company's payroll tax liability for each payee at the Wage Costs stage of the pay batch process. Where a payee was placed in a job order, the system references the payroll tax state that is selected on the job order to determine the rate at which to calculate payroll tax and the remuneration that is subject to payroll tax. Where a payee receives remuneration while not placed in a job order, the system uses the payroll tax state of the agency office by which the payee is managed to determine the rate at which to calculate payroll tax and the remuneration that is subject to payroll tax.

To allow the system to calculate the payroll tax liability, the following configuration is required:

• pay code groups must be created

• payroll tax rates must be defined for each payroll tax state and territory

• payroll tax states must be linked to agency offices.

This is described in detail below.

Payroll Tax Pay Code Groups

Because different remuneration can be rateable for the purpose of payroll tax in different states and territories, pay code groups must be used to determine the subset of pay codes against which remuneration, which is rateable for the purposes of payroll tax, is paid in a given state or territory.

For example, if different types of remuneration are rateable in Victoria and Tasmania, a different pay code group must be configured to define the applicable pay codes for Victoria and Tasmania respectively. However, if the same types of remuneration are rateable in Victoria and New South Wales, both of these states can reference the same payroll tax pay code group.

Pay code groups are configured under Portal > Pay > Maintenance > Pay Code Groups. For more information, see Pay Code Group Maintenance. 

Payroll Tax Rates

Each payroll tax state or territory can have a different rate at which payroll tax is calculated. Therefore, a payroll tax state and rate record must be created to define the payroll tax rate for each applicable payroll tax state and territory.

Each payroll tax state and rate record can define one or more sets of payroll tax rates, where each set of rates corresponds to a specific validity period. The system automatically applies the correct payroll tax rate based on the payroll tax rate that is valid on the end date of a pay batch. Where a payroll tax rate change is to come into force in the future, the new rate can be configured ahead of time and the system will automatically use the correct rate at the correct time.
For more information, see How to Set the Payroll Tax Rates for a Payroll Tax State.

Linking Payroll Tax States to Agency Offices

Payees may receive remuneration that cannot be attributed to a job order. For example, a payee may be eligible to take paid leave while not placed in a job order. In such cases, the system uses the payroll tax state of the agency office that manages the payee to determine the applicable payroll tax rate and the remuneration that is subject to payroll tax. For this reason, agency offices can be linked to a payroll tax state. For more information, see How to Link an Agency Office to a Payroll Tax State.