What is a group of employers?
For payroll tax purposes, employers related or connected to each other are treated as a group. There are 4 categories that deem employers to be members of group. These are:
- Related bodies corporate, where companies own companies (corporations are related within the meaning of Section 50 of the Corporations Act 2001 (Cwlth).
- Common employees are used between businesses.
- Controlling interest, the same person has (or the same persons together have), a controlling interest in at least two businesses.
- Tracing provisions, an entity has a direct, indirect or aggregate controlling interest in a corporation.
Two or more groups of employers can be considered as one group at the discretion of the Commissioner. This can occur where
- 2 or more groups exist, and at least one member is common to each group; or
- 2 or more members of a group, when considered together, have a controlling interest in a business.
For a detailed description of the grouping provisions including examples, refer to the Information Circular No. 4: Groupings.
A group consists of a Designated Group Employer (DGE) and one or more group member(s) which are referred to as a Grouped Employer (GE). More information about Designated Group Employer (DGE) and Grouped Employer (GE) including their responsibilities is included below.
RevenueSA must be advised when entities begin and cease to be part of a group either at the time of annual reconciliation or in writing during the year.
Why do grouping provisions exist?
Grouping provisions exist to prevent the avoidance or reduction of payroll tax liability by splitting wages among a number of entities. The grouping provisions have the effect of adding together the wages paid by group employers and allowing only the designated group employer to claim the deduction.
Do the grouping provisions apply to employers Australia wide?
The grouping provisions apply to employers regardless of where they operate.
For example, 2 employers may be grouped even though they are located and employ in 2 different states (that is, one employer is located and employs only in South Australia and the other employer is located and employs only in Victoria). The businesses would be grouped and their total Australia wide wages for the group (both employers) will be used to determine their deduction entitlement in each state. In South Australia, the total Australia wide wages is also used to determine the rate of payroll tax that applies.
If 2 or more businesses operate under one ABN, are they grouped for payroll tax purposes?
Where 2 or more businesses operate under the same Australian Business Number (ABN), they are considered, for payroll purposes, as one employer. For payroll tax purposes, the employer is referred to as a Non Grouped Employer (NGE).
The total taxable wages paid for each business operating under the same ABN must be combined and lodged by the Non Grouped Employer (NGE) when submitting their payroll tax returns and annual reconciliation.
Is a group entitled to a deduction entitlement?
A group of employers is entitled to an annual deduction entitlement (up to $600,000) which is claimed by the Designated Group Employer (DGE).
If a group employs both in South Australia and in other states and/or territories the deduction entitlement will be proportioned based on the percentage of the group's wages that were paid in South Australia. This is calculated (for a full year) as follows:
(Total South Australian Group Wages ÷ Total Australian Group Wages)
x Maximum deduction entitlement ($600,000)
If at the end of the financial year the Designated Group Employer (DGE) has not used the group’s 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. Excess or unclaimed deduction entitlement cannot be carried over to a different annual reconciliation period.
What is the Designated Group Employer (DGE)?
The nominated member of a payroll tax group entitled to claim the group’s payroll tax deduction entitlement. The Designated Group Employer (DGE) must employ in South Australia and may employ in other states and/or territories.
The group is required to nominate a member of a group to be the Designated Group Employer (DGE). If a Designated Group Employer (DGE) is not nominated, the Commissioner may designate any group member (Grouped Employer (GE)) to receive the deduction entitlement.
Where the group employs in other states and/or territories, the Designated Group Employer (DGE) does not need to be the same in each state and/or territory.
What is a Grouped Employer (GE)?
A Grouped Employer (GE) is a member of a group. The Grouped Employer (GE) is not entitled to claim a deduction entitlement.
The Grouped Employer (GE) may receive a deduction entitlement as part of the annual reconciliation if the Designated Group Employer (DGE) did not claim the full deduction entitlement for the group.
What are the registration requirements for groups?
Each group member (who employs in South Australia) must be registered with RevenueSA where the total Australia wide wages exceed the threshold, (currently $1.5 million).
Group members who do not employ in South Australia do not need to register
Find out more on our Register for payroll tax page.
Do all group members need to lodge a return?
Each registered group member must lodge a return.
Depending on the total wages for the group, the group members, Designated Group Employer (DGE) and Grouped Employer(s) (GE), may be placed on a monthly or annual return cycle.
It is recommended that when lodging the annual reconciliation that the Designated Group Employer (DGE) lodge their annual reconciliation first, followed by the Grouped Employer(s) (GE). This will ensure that any annual deduction entitlement not used by the Designated Group Employer (DGE) can be transferred to the other Grouped Employers (GE).
What if a group structure changes?
RevenueSA must be advised when entities begin or cease to be part of a group either:
- in writing during the year; or
- at the time of annual reconciliation.
Are grouped employers liable for debts of other employers that are in their group?
All members of a group, irrespective of whether or not they employ, are jointly and severally liable for the debts of the group that were incurred whilst they were a member of that group.
This means that if a group member defaults in the payment of payroll tax, the debt may be recovered from any of the other group members who was a member of the group at the time that the liability arose.
Can an employer be excluded from being a member of a group?
As the grouping provisions are very broad, the Commissioner has the discretion to exclude employers from being members of a group.
An employer may be excluded from a group if the Commissioner is satisfied that the business conducted by that member is independent of, and unconnected with, the business conducted by the other members of the group. Some of the information taken into consideration when determining if a business can be excluded from a group include:
- the nature and degree of ownership and control of the businesses
- the nature of the businesses
- any other matters the Commissioner considers relevant.
The Commissioner cannot consider corporations that are related within Section 50 of the Corporations Act for exclusion from a group unless the shares are held by a trustee.
Refer to the Revenue Ruling Commissioner's Discretion to Exclude from a Group - PTA031 and Information Circular No. 4: Groupings for further information.
To apply for exclusion please complete an Application to Exclude from a Group (PDF 72KB).
Information Circulars and Revenue Rulings
Information Circulars and Revenue Rulings include decisions on the interpretation of legislation administered by RevenueSA and of changes in administrative practices or taxation laws.
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