Four relief measures have been announced by the Victorian Government:
- Waiving of 2019-20 payroll tax for employers with annual Victorian taxable wages up to $3 million - announced on 21 March 2020.
- Exempting additional payments under the JobKeeper program from payroll tax - announced on 5 May 2020.
- Deferring 2020-21 payroll tax liabilities for employers with Victorian payrolls up to $10 million, based on their 2019-20 financial year returns, until the 2021-22 financial year - announced on 13 September 2020.
- Waiving of 2020-21 and 2021-22 payroll tax for eligible employers after applying the New Jobs payroll tax credit - announced in the 2020-21 Budget on 24 November 2020.
1. Waiving of 2019-20 payroll tax for eligible employers
Employers with annual Victorian taxable wages up to $3 million were eligible to have their payroll tax for the 2019-20 financial year waived. This tax relief measure is closed; applications and refund claims were to be submitted by 30 April 2021.
2. Exempting additional payments under the JobKeeper program from payroll tax
The JobKeeper program was an Australian Government subsidy for businesses significantly affected by the coronavirus pandemic. The scheme commenced on 30 March 2020 and ended on 28 March 2021.
JobKeeper eligibility requirements were set by the Australian Government.
Any additional payments made to bridge the gap between an employee’s normal wage and the amount required to be paid to the employee to qualify for JobKeeper payments are exempt from payroll tax. The amount required to be paid to an employee for JobKeeper fortnights ending before 28 September 2020 was $1500. The amount required to be paid to an employee for subsequent JobKeeper fortnights to qualify for JobKeeper payments varies depending on whether the employee works 80 hours or more during the reference period. Further information is available on the Australian Taxation Office website.
The following information and examples are based on the amount required to be paid to an employee for JobKeeper fortnights ending before 28 September 2020 of $1500.
- For employees who have come to an agreement with their employer to be stood down and not perform any work, the full JobKeeper amount paid to them is exempt from payroll tax.
- For employees paid less than the JobKeeper amount, the payroll tax exemption applies to the difference between their wage and the $1500.
Examples
Example 1 - I have an employee who has been stood down
Patrick has been stood down. Patrick’s employer receives the JobKeeper payment for him and must pay him $1500 per fortnight. To help make it easier for Patrick’s employer to keep him on, the entire $1500 per fortnight paid to Patrick is an additional payment and is exempt from payroll tax.
Example 2 - I have an employee who is ordinarily paid less than $1500 per fortnight
Olivia was working part time and earning $1000 per fortnight before the JobKeeper program was introduced. Olivia continues to work the same hours. Olivia’s employer now receives the JobKeeper payment for her and must pay her an additional $500 per fortnight – a total of $1500 per fortnight. The additional payment of $500 made by the employer to Olivia is exempt from payroll tax. Olivia's normal fortnightly wage of $1000 is not exempt from payroll tax.
Example 3 - I have an employee who is ordinarily paid more than $1500 per fortnight but their pay has been reduced to less than $1500 per fortnight
Priya was earning $1800 per fortnight before the JobKeeper program was introduced. As a result of the coronavirus pandemic, Priya’s hours have been reduced and her fortnightly wage is now $1 200 per fortnight. Priya’s employer receives the JobKeeper payment for her and must pay her an additional $300 per fortnight – a total of $1500 per fortnight. The additional payment of $300 is exempt from payroll tax. The remaining $1200 of Priya’s fortnightly wage is not exempt from payroll tax.
Example 4 - I have an employee who is currently paid more than $1500 per fortnight
Quinn currently earns $1 800 per fortnight. Consistent with the health restrictions, he continues to work and is paid his normal wage. He also takes a week of paid annual leave at his normal wage. Quinn’s employer qualifies for the JobKeeper program and receives the JobKeeper payment for him. No part of Quinn’s wage is exempt from payroll tax.
Example 5 - I have an employee who is not an eligible employee under the JobKeeper program
Rachel is a casual worker who has been working for her current employer for three months and earns $800 per fortnight. Rachel’s employer is not eligible to receive the JobKeeper payment for her. No part of Rachel’s wage is exempt from payroll tax.
Employers did not need to apply for this emergency relief measure. In line with existing payroll tax arrangements, employers were responsible for:
- Calculating their payroll tax liability and treating the additional payments as exempt wages.
- Lodging monthly returns and paying the relevant payroll tax on taxable wages.
- Maintaining accurate records.
- Providing evidence that the correct amount of tax was paid if requested by the State Revenue Office.
Where an eligible employer who correctly received JobKeeper payments voluntarily chooses to repay some or all of their payments to the Australian Taxation Office, the employer remains eligible for this payroll tax relief measure and can continue to treat the additional payments made to their employee as exempt wages.
Additional payments are not included in rateable remuneration for the purposes of calculating WorkCover premiums. For more information, visit the WorkSafe website.
3. Deferring 2020-21 payroll tax liability for eligible employers until the 2021-22 financial year
Certain employers with Victorian payrolls up to $10 million, based on their 2019-20 financial year annual reconciliation returns, were able to defer their 2020-21 payroll tax liability until the 2021-22 financial year.
This deferral relief applied to each eligible employer. Membership of a payroll tax group was not considered in determining whether or not the member’s Victorian taxable wages for the 2019-20 financial year exceeded the $10 million threshold.
However, employers who were approved to lodge annual returns only and make one annual payment in respect of their payroll tax liability were not eligible for the deferral.
Employers who were eligible could pay their 2020-21 payroll tax liability, as determined in their 2020-21 annual reconciliation return, in four quarterly instalments in the 2021-22 financial year:
- At least 25% of the 2020-21 liability was due on 7 September 2021.
- At least 50% of the 2020-21 liability was due on 7 December 2021.
- At least 75% of the 2020-21 liability was due on 7 March 2022.
- Any outstanding balance of the 2020-21 liability was due on 7 June 2022.
Employers must also have lodged their annual reconciliation return for the 2020-21 financial year no later than 27 August 2021. Unless an employer lodged their annual reconciliation by 27 August 2021, they were not eligible for the tax deferral and any tax owing needed to be paid immediately.
4. Waiving of 2020-21 and 2021-22 payroll tax after applying for New Jobs payroll tax credit
Eligible employers were entitled to a waiver of their 2020-21 and 2021-22 payroll tax after applying the New Jobs payroll tax credit against their liability for each of the financial years (designated financial year).
Eligible employers received a credit of 10 cents for every dollar of Victorian taxable wages paid in the relevant designated financial year that were above the previous financial year’s wages. The credit was applied against the employer’s payroll tax liabilities at the end of the relevant designated financial year. The waiver partially or fully extinguished the payroll tax liability for an eligible employer for the designated year.
An employer or a group of employers was eligible for the relief if their total Australian wages (i.e. Victorian taxable wages plus interstate wages) did not exceed $10 million in the financial year preceding the designated financial year. There were other eligibility requirements which had to be met and this depended on whether or not the employer was a member of a payroll tax group as at 30 June of the relevant designated financial year.
Non-group employers
For an employer who was not a member of a payroll tax group as at 30 June of the relevant designated financial year, the eligibility requirements were:
- The employer was an employer as at 30 June of the relevant designated financial year
- The employer paid or was liable to pay Australian wages before 1 January of the previous year
- The employer’s Australian wages in the previous year were no more than $10 million
- The employer has lodged their annual returns in respect of the designated financial year and the previous financial year.
Eligible non-group employers were entitled to a tax credit of 10 cents for each dollar by which their total Victorian taxable wages paid or payable during the designated financial year exceeded the total Victorian taxable wages paid or payable by the employer during the previous financial year.
The employer did not have to make a claim for the credit. It was applied after the employer lodged their annual return for the designated financial year and any resulting overpayment was subsequently refunded to the employer.
Examples
Example 6
Delicious Food Cafe is a non-group Victorian employer and paid $3.5 million in taxable wages in 2019-20. The business paid $4 million in taxable wages in 2020-21. As its Victorian taxable wages in 2020-21 exceeded its Victorian taxable wages in 2019-20 by $500,000, the business was entitled to a New Jobs tax credit of $50,000. The $50,000 credit was applied against its payroll tax liabilities after it lodged its 2020-21 annual return. This reduced its payroll tax liability for the designated financial year from $162,475 to $112,475 and any resulting overpayment was refunded to the business.
If a non-group employer, who satisfies requirements in points 2 and 3 above, has opted not to defer payment of their 2020-21 payroll tax liabilities as provided in accordance with the relief measure announced on 13 September 2020, the employer shall be able to defer the payment of their monthly payroll tax liabilities until 21 July of the following financial year in respect of:
- the month during which the employer’s Victorian total taxable wages exceed their total Victorian taxable wages paid in the previous year, and
- all following months in the designated financial year.
Example 7
ABC Hotel is a non-group Victorian regional employer and paid $2.5 million in taxable wages in 2019-20. The business employed additional workers during 2020-21 and paid $3 million in taxable wages in 2020-21. As its Victorian taxable wages in 2020-21 exceeded its Victorian taxable wages in 2019-20 by $500,000, the business was entitled to a New Jobs tax credit of $50,000. ABC’s payroll tax liability for 2020-21 before the application of the New Jobs tax credit was $47,470 (i.e. $3 million less $650,000 = $2,350,000 x 2.02%), which is less than the New Jobs tax credit of $50,000. In this case, the credit applied was $47,470 and ABC had any payroll tax paid for 2020-21 fully refunded. The excess credit was not refundable and was not carried forward to the next financial year.
Group employers
For an employer that was a member of a payroll tax group as at 30 June of the relevant designated financial year, the eligibility was based on the total group Australian wages. The eligibility requirements differed slightly depending on whether or not the membership of the group changed composition during either the designated financial year or the previous financial year.
Groups whose membership has remained constant
Where the composition of the group membership remained constant during the designated financial year and previous financial year, the eligibility requirements were:
- At least one member of the group was an employer as at 30 June of the relevant designated financial year.
- The group paid or was liable to pay Australian wages before 1 January of the previous financial year.
- The total Australian wages paid or payable during the previous financial year by the group were no more than $10 million.
- The group has lodged their annual returns in respect of the designated financial year and the previous financial year.
Eligible groups were entitled to a tax credit of 10 cents for each dollar by which the total Victorian taxable wages paid or payable by all the members of the group during the designated financial year exceeded the total taxable wages paid or payable by all the members of the group during the previous financial year.
The credit was applied after all members of the group lodged their annual returns for the designated financial year and was applied to the designated group employer’s (DGE’s) annual return. The resulting overpayment was refunded to the DGE.
Example 8
ABC Holding Coy Pty Ltd and XYZ Subsidiary Pty Ltd constituted a group as at 30 June 2021. The composition of this group remained unchanged throughout 2019-20 and 2020-21. The group paid $5 million in taxable wages in 2019-20. The group increased its workforce during 2020-21 and paid $5.5 million in taxable wages in 2020-21. As the group’s Victorian taxable wages in 2020-21 exceeded the group’s Victorian taxable wages in 2019-20 by $500,000, the group was entitled to a New Jobs tax credit of $50,000. This reduced the group’s payroll tax liability for 2020-21 from $235,225 to $185,225 and any resulting overpayment was refunded to the DGE.
Groups where the members have changed
Where the composition of the group membership has changed during either the designated financial year or the previous financial year (e.g. the group was previously part of a larger group or one of the members was previously not a member of the group), the eligibility requirements were:
- At least one of the members of the group was an employer as at 30 June of the designated financial year.
- At least one member of the group as at 30 June of the designated year paid or was liable to pay Australian wages before 1 January of the previous financial year.
- The total Australian wages paid or payable during the previous financial year by the members of the group as at 30 June were no more than $10 million.
- The members of the group as at 30 June of the designated year have lodged their annual returns in respect of the designated financial year and the previous financial year.
Eligible groups were entitled to a tax credit of 10 cents for each dollar by which W1 exceeds W2, where:
- W1 is the sum of:
- the Victorian taxable wages paid or payable during the designated financial year by each employer who was a member of the group as at 30 June of the designated financial year, and
- for any employer who was previously a member of the group at any time during the designated financial year or previous financial year, and ceased to employ before 30 June of the designated financial year — the Victorian taxable wages paid or payable during the designated financial year by that employer while they were a member of the group or before they were a member of the group
- W2 is the sum of:
- the total Victorian taxable wages paid or payable during the previous financial year by each employer who was a member of the group as at 30 June of the designated financial year; and
- for any employer who was previously a member of the group at any time during the designated financial year or previous financial year, and ceased to employ before 30 June of the designated financial year — the total Victorian taxable wages paid or payable during the previous financial year by that employer while they were a member of the group or before they were a member of the group.
The credit was applied, after all the members of the group have lodged their annual returns for the designated financial year, to the designated group employer’s (DGE’s) annual return. Any resulting overpayment was refunded to the DGE.
Example 9
ABC Travel Melbourne Pty Ltd and ABC Traveland Pty Ltd constituted a group as at 30 June 2021 and were a group throughout 2020-21. ABC Travel Mornington Pty Ltd was a member of the group during 2019-20 but it ceased to be a member of the group and ceased employing from 1 July 2020. The group (including ABC Travel Mornington Pty Ltd) paid $4.5 million in taxable wages in 2019-20. During 2020-21, the group (i.e. ABC Travel Melbourne Pty Ltd and ABC Traveland Pty Ltd) increased its workforce and paid $5 million in taxable wages in 2020-21. As the Victorian taxable wages in 2020-21 of the group exceeded its Victorian taxable wages in 2019-20 by $500,000, the group was entitled to a New Jobs tax credit of $50,000. This reduced the group’s payroll tax liability for 2020-21 from $210,975 to $160,975 and any resulting overpayment was refunded to the DGE.
Example 10
Geelong Manufacturing Pty Ltd and Geelong Sales Pty Ltd (both regional employers) constituted a group as at 30 June 2021.
They paid Victorian taxable wages totalling $4 million and $6.5 million during the 2019-20 and 2020-21 financial years respectively. The two companies were previously part of a larger group, which also included Ballarat Manufacturing Pty Ltd and Ballarat Sales Pty Ltd (also regional employers). Ballarat Manufacturing and Ballarat Sales paid total taxable wages of $4 million during 2019-20 financial year. These two employers also paid a total taxable wages of $2 million during 2020-21 financial year but ceased employing and ceased to constitute a group with Geelong Manufacturing and Geelong Sales from 31 December 2020. The group was entitled to a tax credit of 10 cents for each dollar by which W1 exceeds W2.
- W1 is made up of the total taxable wages paid by Geelong Manufacturing and Geelong Sales during 2020-21 ($6.5 million) plus the total taxable wages paid by Ballarat Manufacturing and Ballarat Sales during 2020-21 whilst they were part of the group ($2million) = $8.5 million
- W2 is made up of the total taxable wages paid by Geelong Manufacturing and Geelong Sales during 2019-20 ($4million) plus the total taxable wages paid by Ballarat Manufacturing and Ballarat Sales during 2019-20 whilst they were part of the group ($4million) = $8 million
As W1 exceeds W2 by $500,000, the group was entitled to a credit of $50,000. This reduced the group’s payroll tax liability for 2020-21 from $158,570 to $108,570 and the resulting overpayment was refunded to the DGE.
Frequently asked questions about the New Jobs payroll tax credit
Do I need to do anything to claim the New Jobs payroll tax credit?
No. If you were eligible for the credit, it was applied against your payroll tax liability for the designated year after you lodged your annual return for that year.
Was my business eligible if my 2019-20 payroll tax was waived?
Yes. Businesses whose Victorian taxable wages were less than $3 million in 2019-20 financial year and had their tax waived / refunded were eligible if they met the eligibility requirements for the New Jobs payroll tax credit.
Did my business need to increase wages in both years to be eligible for the credit?
No. Eligibility for the New Jobs payroll tax credit in 2020-21 and 2021-22 financial years were assessed independently. That means you could be eligible for the credit in either year or both years.
Is my business eligible for the New Jobs payroll tax credit if I have chosen to defer my 2020-21 payroll tax liabilities?
Yes. Businesses whose Victorian taxable wages were less than $10 million in 2019-20 and have chosen to defer their 2020-21 payroll tax payments may still have been eligible for the New Jobs payroll tax credit. Any credit earned by a business that chose to defer its 2020-21 payroll tax payments was deducted from its repayment(s) of payroll tax.
What happens if my New Jobs payroll tax credit is more than my tax liability for the designated financial year?
Your payroll tax bill for the designated financial year was reduced to zero. Excess New Jobs payroll tax credits were not refundable and were not carried forward to the next designated financial year.
Do I include ‘additional wages’ required by the JobKeeper Payment scheme when calculating my eligibility for the New Jobs tax credit?
No. Additional wages required by the JobKeeper Payment scheme, such as wages paid to staff stood down or wages above an employee’s usual salary, were not taxable wages for the purposes of the New Jobs payroll tax credit. As such, these ‘additional wages’ were not taken into account.
Do I receive a New Jobs tax credit for increases in interstate wages?
No. The New Jobs tax credit only applied to increases in Victorian taxable wages.
Do I receive a New Jobs tax credit if my business increased its wages during the designated financial year but my business ceased to employ before 30 June of the designated year?
No. The New Jobs tax credit only applied to employers that employed workers to the end of the designated financial year.
