Employees from Overseas Payments and benefits related to workers recruited from outside of Australia (such as 457 Visa Holders) are subject to payroll tax in the same way as workers recruited within Australia. Payroll Tax on Unpaid Wages and Benefits PRTA provides that payroll tax is payable on wages and benefits paid or payable. This means that if, on investigation, it is found that the employer has provided fringe benefits, but not paid fringe benefits tax to the Australian Taxation Office (ATO), TRO will assess payroll tax on the value of fringe benefits that should have been declared to the ATO. The same principle would apply if, for example, an employer has not made superannuation contributions that it was required to make on behalf of employees or contractors, in which case TRO would estimate the value of unpaid superannuation and calculate payroll tax due on that amount. Further information on other types of wages commence on page 21. There is also a comprehensive alphabetical checklist of all types of taxable wages and benefits commencing on page 70. Common Errors Made in Payroll Tax Returns The following table provides a list of the more common payroll tax errors and oversights made by employers in preparing their returns, and is based on TRO’s experience in conducting investigations and answering enquiries from taxpayers. No. Error or Oversight For further information click on link below 1 Misunderstanding What is Meant by Wages Some employers assume incorrectly that wages means either the employee’s before or after income tax pay. For payroll tax purposes, wages means all payments and benefits provided to employees, directors and (in some cases) contractors. Further information is available from page 7 2 Contractor Payments In many circumstances, payments to contractors are taxable wages. Further information is available from page 34 3 Directors’ Fees and Benefits Directors’ fees, wages and other benefits (paid to working or directors) are taxable wages. Further information is available from page 7 4 Fringe Benefits – Not Recognising Them Often employers are providing fringe benefits but do not recognise them as such (for example, home-garaged cars, discounts, family travel). Further information is available from page 26 5 Fringe Benefits – Declaring to the ATO but not TRO TRO has that some employers are correctly fringe benefits to the ATO, but have overlooked declaring these to TRO. Further information is available from page 26
3 Individual natural person acting as a sole trustee The individual person Dave Devonshire as trustee for the Dave Family Trust trading as Dave’s Diving School. Dave Devonshire as the individual person (in the capacity of trustee). The business name or trading name has no legal status for grouping or payroll tax purposes – it is for advertising and customer information purposes only. The business entity is ‘Dave Devonshire as trustee for the Dave Family Trust’. 4 Company (private or public) carrying on business in own right Majority of directors ABC Pty Ltd; with two directors. At director level must be unanimous, as one of two is not a majority. If ABC Pty Ltd had three directors, two would constitute a majority. 5 Company (public or private) carrying on business in own Majority of voting shares ABC Pty Ltd has 100 voting shares, spread evenly over four individuals (25 voting shares each). Any of the four shareholders together would be a controlling interest. Any two shareholders together represent exactly 50% of voting shares, which is not a majority, which must be greater than 50%. 6 Company (public or private) acting as trustee Majority of voting shares Majority of directors As per 4 and 5 above. As per 4 and 5 above. As per 4 and 5 above. 7 Association Persons who together constitute more than 50% of the board of management (sometimes called ‘the committee’) (or equivalent). Darwin South Surf Riders Association has a board of management of seven. All members of the board of management are elected by and from the local members. Any four of these persons acting together have a controlling interest.
8 Association Persons who can control the composition of the board of management. The articles of Darwin South Surf Riders Association allow a simple majority of members in a general meeting of which proper notice has been given and at which a quorum is present to change any or all of the board of management. A majority of members in general meeting as specified in articles. 9 Association Persons who can control the composition of the board of management. The Origami Association has a board of management of 11 people. Under its articles, five of these people are elected by and from local members, and the remaining six are appointed by the Australian Association of Origami Clubs. The Australian Association of Origami Clubs (who can appoint the majority of committee members). As a consequence, the Australian Association of Origami Clubs is grouped with the Darwin-TimorLeste Origami Association. 10 Partnership Persons who are entitled to, individually or together, (beneficially or not) more than 50% of the partnership’s capital and or income. A, B and C carry on business as ABC Services under the ABC Partnership. Each has a one-third entitlement to capital and profits. A and B together A and C together B and C together A, B and C together.