There are 2 payroll tax surcharges which apply if you pay Victorian taxable wages and your Australian wages exceed the first annual threshold of $10 million, with a first monthly threshold of $833,333. Both surcharges are calculated on the same basis.
Both surcharges are payable at the same time as payroll tax is payable. Therefore, if you pay payroll tax monthly, you will also pay the surcharges monthly and if you pay payroll tax annually, you will pay the surcharges annually. You will not need to lodge separate returns for the surcharges.
Mental health and wellbeing surcharge
The mental health and wellbeing surcharge (MHW surcharge) is a revenue mechanism to provide a stable and dedicated form of additional funding for the mental health system.
It represents one of the recommendations made by the Royal Commission into Victoria’s mental health system and the Victorian Government committed to implementing all of the recommendations of the Royal Commission. Every dollar collected will be spent on the provision of mental health services.
The MHW surcharge commenced on 1 January 2022.
COVID-19 debt temporary payroll tax surcharge
The COVID-19 debt temporary payroll tax surcharge will provide revenue to offset the debt incurred by the state because of support provided during the COVID-19 pandemic. The COVID-19 surcharge commenced on 1 July 2023 and applies for 10 years, until 30 June 2033.
Who pays the surcharges?
You must pay the surcharges if you pay Victorian taxable wages and your Australian wages exceed the first annual threshold of $10 million, with a first monthly threshold of $833,333.
You must also pay the additional rate for both surcharges if you pay Victorian taxable wages and your Australian wages exceed the second annual threshold of $100 million, with a second monthly threshold of $8,333,333.
If you are a member of a group, these thresholds apply at the group level.
The annual thresholds are adjusted proportionately if you are an employer for less than the full financial year.
Wages that are subject to Victorian payroll tax are subject to the surcharges. Any wages exempt from payroll tax (such as wages paid or payable to an employee who is taking primary or secondary caregiver leave or who is absent from work to volunteer as a firefighter or respond to other emergencies) will also be exempt from the surcharges.
How much are the surcharges?
Both surcharges are calculated on the same basis. For each surcharge, the amount you must pay is 0.5% of your Victorian taxable wages over $10 million and an additional 0.5% of your Victorian taxable wages over $100 million.
Combined, the amount you must pay is 1.0% of your Victorian taxable wages over $10 million and 2.0% of your Victorian taxable wages over $100 million.
If you are a member of a group, these thresholds apply at the group level and are claimed by the designated group employer. These thresholds are adjusted proportionately if you are an employer for only part of a financial year, or if you are also liable to pay wages in another Australian jurisdiction.
