Common payroll tax errors

The Department of Finance commented that its Compliance Division undertakes audits and investigations to ensure that employers liable for pay-roll tax adhere to legal requirements prescribed by the Pay-roll Tax legislation.

 Such examination serves to recognise common pay-roll tax errors made by employers, including:

• Failing to register when total liable wages exceed the Western Australia threshold of $750,000 per annum;
   
• Failing to declare fringe benefits and benefits under employee share schemes;
   
• Failing to include all liable wages such as director's fees and superannuation;
   
• Incorrect claiming of an exemption for certain wages;
   
• Incorrect classification of employees as contractors; and
   
• Late lodgment of monthly or annual returns
   

Penalties will result if a taxpayer:

• Fails to register as and when required;
• Fails to lodge returns and payments on time;
• Underpays tax due;
• Understates wages in returns; or
• Provides false or misleading information.

Lastly, the Department of Finance states that taxpayers who voluntarily declare a liability may obtain substantially lower penalties in comparison to those who do not.