In the spirit of Halloween we would like to share with you a true scary tax story of ours. A story that will give you a good reason to be scared of the State Revenue Office.
It was a beautiful sunny day. The birds were chirping, the sky was blue, not a cloud in sight. Until suddenly is wasn’t. A big grey, thundering cloud appears with bolts of blistering lightning cracking and striking the earth. But it turns out it wasn’t a cloud after all [pause for suspense], it was a letter from the State Revenue Office [insert shock expression here].
So the story goes, a lovely client of ours was working away in their business. Pulling the long hours, head down doing what a business owner does best. Then suddenly, unexpectedly, the State Revenue Office shipped off a letter to notify them they were over the payroll threshold and are now liable to pay payroll tax. The threshold for Victoria is $650,000, with a tax rate of 4.85%. So, that’s a whopping $31,525 tax bill that they weren’t expecting. Now that can throw a lot of things out of whack, and it’s sure not fun knowing that your bank account is going to be going down by that much! But wait! It gets worse….
This letter was relating to the 2016 tax year, meaning the State Revenue Office is three years behind. Presuming this business owner hasn’t let anybody go, we can go on assuming that they can expect another minimum of $63,050 worth of payroll tax to be paid across the next two years. Not happy Jan.
Now unfortunately this isn’t something your accountant is going to pick up on, nor your bookkeeper. By the time the information gets back to your bookkeeper it’s too late. So make sure your payroll officer is on top of this, and that you’re kept up to date so you don’t wake up one morning owing the State Revenue Office $94,575.
Now be aware that every state across Australia has different payroll threshold and obligations.
If you want to find out what your payroll threshold is for your state, you can check it out here.
If you have any other questions about payroll tax, or any tax for that matter of fact, then you know the people that know their stuff about tax (and especially tax DEDUCTIONS). We’re more than happy to have a chat with you!