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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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