Payroll Tax Calculations (2023)

When does Payroll Tax calculate for an employee?

Payroll Tax is attributed at the time that a pay run containing an employee’s pay is marked as Paid. The system will capture and store the relevant pay data (the current Payroll Tax rate and the exemption settings for employees and pay items) to calculate the Payroll Tax amounts for each Payable State when you run the Payroll Tax Report.

Each pay is considered against:

• whether the employee has been paid already within the same calendar month;
• whether the employee has been paid in the same or different states for pay runs within the same calendar month; and,
• whether the earnings are exempt according to the Payroll Tax Exemption hierarchy.

After these considerations, a Payable State will be assigned, and Payroll Tax will be attributed using the current Payroll Tax Rate for that state. This amount is calculated using the formula: 

(PTAX Taxable Wages + PTAX Taxable Super + PTAX Taxable Contributions) x Payroll Tax Rate

It is important to note that your Payroll Tax liability in Astute may vary from the liability that is calculated via the State Revenue Office (SRO) website. Astute will calculate Payroll Tax based on the configurations you’ve set up in your portal, and we recommend that you cross-check your liability via the SRO website. 

How is a Payable State assigned?

As the Payroll Tax Report captures data after each pay run is Paid, the Payable State is a dynamic value. If you run the report multiple times within a calendar month, you may notice the Payable State change as more data becomes available. 

There are several considerations that the Astute system will undertake when determining the Payable State to assign to an employee’s earnings, depending on how the employee has been paid within the month:

• Employees working in one state or territory only
• Employees working across multiple states or territories within the month
• Employees working within one state or territory with job detail changes
• Employees with no payable state

Employees working in one state or territory only

Payroll Tax is payable to the state or territory where the employee worked, with the Payable State determined by the Workplace State, set in Users > Employees > select employee > select job > Workplace Details > Workplace Address State.

If a Workplace State is not set, the employee’s address is used (pulled from Users > Employees > select employee > Personal Details > Postal Address State).

Please note that only the Workplace State on the job is used to determine the Payable State, not the Workplace State on the Customer profile. 

Employees working across multiple states or territories within the month

The primary place of residence for the employee is used as the starting point for allocating Payroll Tax in these cases, using the employee’s Postal Address State in their Personal Details tab.

For example, if an employee resides in Victoria, and has two jobs in NSW and Queensland within the calendar month, their Payroll Tax will apply to Victoria, since this is their residence. 

If an employee is not based in any Australian state or territory during a calendar month, Payroll Tax will be payable in the state or territory where the employer is based (ie where their ABN is registered, per Config > Company Management > select entity > Payroll > Payroll Address State). 

This is rare but can occur in cases where an employee’s residence is not in Australia, such as Working Holiday Makers. 

Employees working within one state or territory with job details changes

When an employee works only one job in a calendar month and is paid multiple times, and either the State assigned to their job or other job details are updated, Astute will apply the latest details of the job to determine the Payable State. 

Only one entry will appear in the Payroll Tax Report for the job.

Employees with no payable state

If a Payable State cannot be determined (eg employee address, job address, and entity address are all not provided), the Payroll Tax Report will show a dash in the Workplace State and Payable State columns. 

The Threshold, Tax Rate, and Tax Payable values will be zero, as they cannot be calculated. 

If these entries appear when you generate the Payroll Tax report, you’ll need to check that the employee, job, and entity have the correct details entered to ensure that the correct Payable State is allocated. 

Payroll Tax Exemption Hierarchy

To determine whether an employee’s wages are included as part of the gross amount for calculating Payroll Tax liability, Astute will consider the following hierarchy in order:

1. If the entity is NOT liable for Payroll Tax (ie Payroll Tax has not been enabled for Suppliers in Company Management), then all contractors paid under that entity are automatically exempt.
2. If the entity is liable for Payroll Tax but the Supplier is exempt, all contractors paid under the Supplier are automatically exempt. 
3. If the Supplier is liable but the Customer is exempt, all contractors paid under the Customer are automatically exempt. 
4. If the Customer is liable but the Job is exempt, wages linked to the job will be automatically exempt. 

Note: If a Customer is exempt from Payroll Tax, but the Payroll Tax exemption setting is overridden on the employee’s job (ie the job is liable for Payroll Tax), then Payroll Tax will calculate for any non-exempt pay items related to that job. 

Exempt Pay Items and Payroll Tax

If the contractor or employee is not exempt from Payroll Tax based on the above hierarchy, the system will then check if any of the pay items, deductions, superannuation items, or contributions included in the employee’s pay are marked as exempt, and will exclude any earnings reported using those items. 

If the Payroll Tax Exempt settings for any items are changed after a pay run is marked as paid, these changes will not apply retroactively. For example:

• In the first week of the month, a pay item Base Hourly is marked as Payroll Tax Exempt at the time a pay run including it is marked as Paid. 
  • All pay data associated with Base Hourly is not included in Payroll Tax calculations.
• In the second week of the month, the configuration of the Base Hourly pay item is updated so that it is liable for Payroll Tax, then another pay run containing the item is marked as Paid. 
  • The Payroll Tax report will include all applicable pay data from the second pay run; all pay data from the first pay run will still be excluded. 

If a pay run has been processed with the incorrect Payroll Tax exemption settings, you may need to process an adjustment pay run. 

Recalculate Payroll Tax with New Rates

If a new Payroll Tax rate is configured with an Effective Date that falls at the start of the current calendar month, any Payroll Tax that has already been attributed will be recalculated using the new rate. 

For example:

• Payroll Tax is configured with a rate of 5% and an Effective Date of 01 March 2023
• An employee has been paid weekly on 01 March and 08 March 2023, and Payroll Tax has been calculated at 5%, in line with the above rate. 
• On 10 March, an administrator adds a new Payroll Tax rate of 6% with an Effective Date of 01 March 2023. This rate will immediately become the Current rate, as the Effective Date has been reached.
• When the new rate is saved, the Payroll Tax for both of the employee’s March pays will recalculate using the new rate of 6%, as both pays have a Pay Date on or after the Effective Date of 01 March 2023.