State & Territory Taxes

Payroll tax is a self-assessed State and Territory tax on wages that employers pay employees. The tax is calculated based on the amount of wages you pay employees Australia-wide per month.

For employers in the ACT, payroll tax is only payable if your total taxable wages, or the total taxable wages of the group of employers you belong to, exceed the payroll tax threshold. As of July 2016, the monthly payroll tax threshold in the ACT is $166,666.66, or $2 million per year.

The payroll tax rate and threshold in the other States and the Northern Territory differ.

Payroll tax is applied to payments that are ‘taxable wages’. Taxable wages refer to any payment that an employer provides to an employee in return for services. For payroll tax in the ACT, this includes:

• remuneration, wages, salary, commission, bonuses, allowances or other benefits
• superannuation contributions
• payments to contractors
• director’s fees
• payments to employees (before or after retirement or termination) that relate to their employment term, such as accrued leave and any other bonuses or loading
• eligible termination payments
• the value of any payments made in kind (where no money is involved but goods or services are exchanged for other goods or services);
• payments to employment agencies
• benefits, including fringe benefits
• wages paid to sick or injured employees, and
• employer contributions to employee share schemes.

A ‘group’ for the purposes of assessing an employer’s liability to pay payroll tax in the ACT is two or more employers that:

• Are related bodies corporate
• Use a common set of employees
• The same people have a controlling interest in two or more businesses, and “business” is defined to include the carrying on of a trust including a dormant trust, or
• One employer has a controlling interest in another (being a corporation).

If an employer is a member of two or more groups, all the members of those groups constitute one group.

The grouping provisions in payroll tax legislation – particularly as relate to common control – are complex and far-reaching. In our experience, many business owners are caught out by these provisions where the business has a discretionary trust in its structure.

Furthermore, the grouping provisions are absolute in that employers either are or are not grouped. It is irrelevant whether the employers actually run their business together or run them separately. In situations where grouped business actually run separately to each other, an application to the relevant Revenue Commissioner must be made asking the Commissioner to exercise his discretion to degroup the businesses.

Land tax rules vary between each State and Territory. The land tax rules in the ACT vary wildly from the land tax rules in NSW, for example.

In the ACT, land tax is paid by the owner on all rateable land that is rented residential land, or residential land owned by a corporation or a trustee. Land tax is not payable on commercial land in the ACT.

However some land, such as rural land, is exempt from land tax in certain circumstances.

An owner of rateable land that is subject to land tax in the ACT must advise the ACT Revenue Office if the property is rented.

Land tax is assessed on land which is owned/rented, on the first day of each quarter.

There is no threshold amount in the ACT. Land tax is calculated on the unimproved value of the land.

Stamp duty is generally payable on the transfer of, or declaration of a trust over, dutiable property. Dutiable property includes all forms of land and land use entitlements, and may include some types of goods in certain circumstances.

Importantly, stamp duty can be triggered when an interest in a partnership, company or trust that owns dutiable property, is transferred.  Furthermore, from 1 July 2018, land tax was extended to apply to all residential dwellings that are not the owner’s principal place of residence, whether they are rented or not.

Different rates of stamp duty apply to commercial and residential property.

Stamp duty is assessed on the greater of consideration (price) or market value of the duitable property.

In September 2017 the ACT Government introduced the barrier free model for the payment of stamp duty. This means that for most property transactions, stamp duty becomes payable 14 days after settlement, when the transfer of title is lodged with the ACT Land Titles Office for registration.

Yes, all tax debts assessed by a local Revenue Commissioner are payable, even disputed debts.

Where tax is paid and the dispute is resolved in your favour (in whole or in part), the Revenue Commissioner will generally pay interest on the overpayment.

Debt recovery action may be commenced against you at any time for an unpaid tax debt unless there is an approved payment plan in place between you and the local Revenue Office.

The local Revenue Commissioner (via the local Revenue Office ATO) may initiate recovery action for collection of unpaid disputed debts at any time, even before determining an objection, based on an analysis of the risk associated with the case, including your past conduct.

Some of the ways in which the local Revenue Commissioner can recover an unpaid tax debt include:

• using an external debt collection agency to deal with you
• issuing a garnishee notice
• placing a caveat or statutory charge on property
• forcibly repossessing land for sale
• issuing a creditors statutory demand under the Corporations Act 2001 (Cth)
• issuing a court claim, including against the directors of a defaulting company
• seeking winding up orders by a court against a company, and
• issuing a bankruptcy notice and seeking a sequestration order by a court against individual directors.