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Thursday, 1 August 2013

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.