Payroll tax is calculated using the formula below:
GROSS Taxable South Australian Wages
LESS
Deduction
EQUALS
NET Taxable South Australian Wages
MULTIPLIED BY
Tax Rate
EQUALS
Payroll Tax Payable
This basic formula varies based on group membership and interstate wages.
Tax rates
Current rates
Gross Taxable Wages does not exceed $1.5 million
Nil
Gross Taxable Wages exceeds $1.5 million but not $1.7 million
variable from 0% to 4.95%
Gross Taxable Wages exceeds $1.7 million
4.95%
Which rate should be used?
The rate will be calculated based on the employer’s total Australian wages. If the employer is part of a group, it will be calculated on the group’s total Australian wages.
The actual payroll tax rate that will apply for an employer cannot be finalised until the annual reconciliation process is completed in July each year.
However, to allow employers to lodge and pay monthly payroll tax returns, an estimated payroll tax rate will be determined based on the employer’s estimated annual taxable Australian wages declared at the start of the financial year. RevenueSA Online will determine the estimated payroll tax rate.
Use the payroll tax calculator to estimate the payroll tax rate.
Differences between the estimated payroll tax and actual payroll tax will be determined as part of the annual reconciliation process, with any over or under payment of payroll tax being resolved at that time. This will mean that:
- businesses will be entitled to a refund where the estimated tax is higher than the actual tax for the financial year; but
- for businesses where the estimated tax is lower than the actual tax for the financial year the business will be required to pay any shortfall as part of the annual reconciliation process.
To ensure that there is not an underpayment of tax at the annual reconciliation, businesses are encouraged to review their individual and total group Australian (if applicable) estimates both at the start of the year and throughout the year to ensure that the appropriate rate is being applied.
What is the deduction?
Employers are entitled to a deduction amount which is subtracted from their wages paid. The maximum deduction available is $600,000 per annum (up to $50,000 per month).
The deduction an employer is entitled to claim may vary according to whether the employer is a member of a group, how much of the financial year the employer (or group) employ and the employer’s (or group’s) interstate wages.
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South Australian deduction entitlement
The maximum annual deduction entitlement available in South Australia is $600,000.
Employers are entitled to a deduction amount which is subtracted from their wages paid.
Let’s look at a simple example:
Business ABC employs only in South Australia and has taxable wages of $1.6m.
Their deduction entitlement is $600,000.
Payroll tax will be calculated on $1 million, that is $1.6 million - $600,000.
The annual deduction entitlement will be reduced if the employer:
- is part of a group;
- employs (or the group employs) in South Australia for part of the financial year; or
- Employs (or the group employs) in South Australia and another state and/or territory.
Part of a group
If you are a member of a group, only the Designated Group Employer (DGE) is entitled to claim the deduction entitlement.
If at the end of financial year the designated group employer has not used the groups full deduction entitlement they can allocate any unused deduction entitlement to one or more of the group members as part of the annual reconciliation process.
Employ for part of the financial year
As mentioned the deduction entitlement will be reduced if an employer did not employ for the full financial year.
You can see on the screen how the deduction entitlement may be adjusted for an organisation who only employs in one state or territory.
If the employer employs for a full financial year then they will be entitled to a full deduction entitlement. If the employer only employs for a portion of the financial year, the deduction entitlement will be adjusted based on the number of days they employed.
Employ in South Australia and another state and/or territory
If you employ in multiple jurisdictions your deduction entitlement will be adjusted.
The South Australian annual deduction entitlement is calculated by determining the proportion of the wages paid in South Australia divided by the total Australia wide wages which is then multiplied by South Australia’s maximum annual deduction entitlement, which is $600,000.
Let’s look at an example. South Australian Wages are $700,000 and the Australia wide wages are $2.1 million. As wages are paid in South Australia and interstate, the employer’s deduction entitlement will be adjusted. In this scenario, the employer would be eligible to claim an annual deduction entitlement of $200,000 in South Australia.
How do I find out what my deduction entitlement is?
RevenueSA Online will calculate your deduction entitlement based on the details provided in your annual reconciliation or if you have recently registered from the details provided at registration.
If you are on a monthly return cycle a monthly estimated deduction entitlement will deducted from your monthly total gross South Australian wages.
The monthly deduction entitlement is calculated by using the formula shown on the screen.
End
That brings us to the end of this educational video.
If you require any additional assistance please contact us.
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Who claims the deduction entitlement?
Non-Group employers
The employer is able to claim the deduction entitlement.
Group employers
Only the Designated Group Employer (referred to as the DGE) is able to claim the deduction entitlement on behalf of the group.
Employers who are members of a group are not all entitled to a deduction.
However, if the full deduction entitlement has not been claimed by the Designated Group Employer for the financial year, the Designated Group Employer can request for any unused deduction to be applied to one or more group members during the annual reconciliation process.
RevenueSA must be informed, in writing, whenever there is a change in the group membership. RevenueSA will advise the action to be taken to establish the deduction entitlement of the group.
Find out more about grouping of employers on our Grouping of employers page.
How is the deduction entitlement calculated?
Only employ in South Australia
Employ for full financial year
Employers can claim the full deduction of $600,000 per annum. This will be applied as $50,000 per month.
Employ for part of a financial year
Employers can claim a proportionate amount of the deduction. The deduction amount will be based on the number of days employing in South Australia:
Maximum Deduction
X
No. of Days
Employing in SA*
365**
* Equals the number of days in the relevant financial year of which the employer paid or was liable to pay taxable wages.
** 366 days should be used if a leap year
Employ in South Australia and Interstate
Employ for full financial year
For employers can claim a proportionate amount of the deduction The deduction will be based on the their South Australian wages in relation to their total Australia wide wages, using the formula below:
Taxable South
Australian Wages*
Taxable Australian
Wide Wages*
X
Maximum Deduction
* or group wages
Employ for part of a financial year
Employers can claim a proportionate amount of the deduction. The deduction amount will be based on the number of days employing in South Australia and their South Australian wages in relation to their total Australia wide wages, using the formula below:
Taxable South
Australian Wages*
Taxable Australia
Wide Wages*
X Maximum Deduction X
No. of Days
Employing in SA**
365***
* or group wages
* Equals the number of days in the relevant financial year of which the employer paid or was liable to pay taxable wages.
*** 366 days should be used if a leap year
Which state or territory are wages declared?
If an employee performs work only in South Australia, you must declare their wages in South Australia.
If an employee performs work in more than one state or territory in one month, or the work is performed overseas or offshore, the Nexus Provisions outline where wages should be declared.
For more information on what wages are see our Wages page.
Find out which state or territory you need to declare your wages in for payroll tax on our Nexus Provisions page.
Contact Us
When contacting us please provide your South Australian Taxpayer Number (if known), ABN, and organisation name.
| payrolltax@sa.gov.au | |
| phone | (08) 8226 3750, select option 5 |
| fax | (08) 8226 3805 |
| post | GPO Box 2418, Adelaide, SA 5001 |
You can reach us during business hours: 8:30am - 5:00pm (South Australian time), Monday to Friday (excluding public holidays).
Do you want to provide feedback or lodge a complaint?
You can do so via our feedback and complaints page.