Fact Sheet of Payroll Tax for a Group of Companies with Different Owners
Payroll tax is a state tax imposed on the total wages paid by employers to their employees when the total wages exceed a certain threshold. In Queensland (QLD), businesses that are grouped together for payroll tax purposes must combine their wages to determine if they exceed the threshold.
Click here to our fact sheet on payroll tax
What is a Group for Payroll Tax Purposes?
AÂ group for payroll tax purposes refers to two or more businesses that are related through various connections, such as shared control, common employees, or shared use of resources. Grouping rules apply even if the businesses have different owners.
Grouping Criteria
Businesses may be grouped together if they meet any of the following criteria:
- Common Control: One person or entity controls, or has a controlling interest in, two or more businesses.
- Related Companies: Businesses are related under the Corporations Act 2001, such as parent and subsidiary companies.
- Common Employees: Employees perform duties for more than one business within the group, and their wages are shared between these businesses.
- Common Use of Resources: Businesses share resources such as premises, equipment, or management, and these shared resources suggest they operate as a single entity.
Payroll Tax Threshold for Groups
Annual threshold: $1.3 million (as of the 2023-24 financial year).
The wages of all businesses within the group are combined to determine if the total exceeds the threshold.
Payroll Tax Rate
Standard rate: 4.75% for group wages of $6.5 million or less.
Higher rate: 4.95% for group wages above $6.5 million.
Designated Group Employer (DGE)
Within a group, one business is usually nominated as the Designated Group Employer (DGE).
The DGE is responsible for claiming the payroll tax threshold on behalf of the group.
The DGE must lodge monthly returns, pay the payroll tax, and lodge the annual return.
Grouping Examples
- Example 1: Common Control:
Company A and Company B have different owners, but one person has a controlling interest in both companies.
The companies are grouped, and their wages are combined to determine payroll tax liability.
- Example 2: Common Employees:
Company X and Company Y share employees who work for both companies.
The companies are grouped due to shared employees, and the combined wages are used to calculate payroll tax.
Exclusions from Grouping
In certain circumstances, a business can apply for an exclusion from a group if it can demonstrate that it operates independently and is not connected in a way that requires grouping.
Applications for exclusion must be made to the Queensland Office of State Revenue, and approval is at their discretion.
Impact of Grouping on Payroll Tax
Combined Wages: The total wages of all businesses within the group are combined to determine if they exceed the payroll tax threshold.
Shared Threshold: The $1.3 million threshold is shared among the group members, and only one threshold can be claimed by the group as a whole.
Higher Liability: Grouping can lead to a higher payroll tax liability if the combined wages exceed the threshold.
Compliance and Penalties
Businesses within a group must ensure accurate reporting and payment of payroll tax.
Failure to comply with grouping provisions can result in penalties, including fines, interest on unpaid tax, and legal action.
Key Dates
- Monthly returns: Due by the 7th of each month.
- Annual return: Due by 21 July each year.
This fact sheet provides an overview of payroll tax obligations for a group of companies with different owners in Queensland. Businesses should consult with the Queensland Office of State Revenue for detailed information and specific advice related to their circumstances.
For more infomation contact Cascade Accounitng & Tax on ccs@cascadeconsulting.com.au or phone 07 3422 1333.
