Payroll tax

Employer status and grouping FAQ's

Have there been any changes to your employer status or group structure?  Incorrectly declaring your employer status, business activity or group structure may result in your business over paying or under paying its payroll tax liability.

Your employer status is related to your grouping structure declared for payroll tax return purposes. As a starting point to gauge whether you may be grouped for payroll tax – click on the questionnaire below or refer to some of the FAQ's below.

Is the business registered for payroll tax in the ACT?

What is my Employer Status?

There are 4 categories of employer status that can be declared on your payroll tax return, they are:

  • Is an employer (registered for payroll tax in the ACT) who pays taxable wages in the ACT.
  • An independent employer is not a member of a group under any of the grouping provisions in the Payroll Tax Act 2011.
  • An independent employer may claim their portion of the ACT tax free threshold ($166,666.66 per month or $2,000,000 per year)
Example
  • Mr and Mrs Petal own Prickles and Thorns Pty Ltd, a gardening company that operates in the ACT. Mr and Mrs Petal are the sole directors and shareholders and have no links to any other companies.
  • Prickles and Thorns Pty Ltd is an independent employer and is not grouped for payroll tax purposes.
  • Is an employer (registered for payroll tax in the ACT) who pays taxable wages in the ACT and is a member of a group.
  • Members of a group may designate one employer (registered for payroll tax in the ACT) who is a member of the same group, to be the DGE for the group.
  • The DGE must be approved by the Commissioner.
  • The DGE is the only member of the group that can claim the group’s entitlement to the ACT portion of the tax-free threshold. ($166,666.66 per month or $2,000,000 per year)
  • All other ACT registered group members must also lodge their own payroll tax returns.

Note - Other group members (that are not the DGE) cannot claim the tax free threshold and will pay a 6.85% rate on wages paid in the ACT

To apply for Commissioner Approval to be a Designated Group Employer click here

Example
  • Luigi’s Linguini Pty Ltd, Anthony’s Antipasto Pty Ltd and Papa Pepe’s Pizzeria Pty Ltd are all grouped for payroll tax purposes.
  • Papa Pepe’s Pizzeria Pty Ltd has been nominated as the Designated Group Employer for the group.
  • Papa Pepe’s Pizzeria Pty Ltd is entitled to claim a portion of the tax-free threshold on the company’s ACT taxable wages on behalf of the ACT group.
  • A Joint Return Lodger is an approved DGE employer that is responsible for lodging a payroll tax return on behalf of the ACT group
  • A Joint Return Lodger must be approved by the Commissioner
  • The Joint Return Lodger is the only member of the group that can claim the group's entitlement to the ACT portion of the tax-free threshold. ($166,666.66 per month or $2,000,000 per year)
  • The other members of the group stated in the joint return are not required to lodge their own payroll tax returns
  • To apply for commissioner approval to be Joint Return Lodger for a Group click here

    Example
    • Sally’s Skydiving Pty Ltd and Penny’s Parachutes Pty Ltd are grouped for payroll tax purposes.
    • Penny’s Parachutes Pty Ltd has been nominated and approved as the JRL for the ACT group.
    • As the JRL, Penny’s Parachutes Pty Ltd lodges a single ‘joint return’ on behalf itself and Sally’s Skydiving Pty Ltd by including ACT taxable wages for Sally’s Skydiving Pty Ltd as well as its own ACT taxable wages in all submissions made by Penny’s Parachutes Pty Ltd.
    • Sally’s Skydiving Pty Ltd is not required to submit any lodgements while covered under the JRL nomination of Penny’s Parachutes Pty Ltd.
  • Is an employer (registered for payroll tax in the ACT) who pays taxable wages in the ACT and is a member of a group.
  • An employer may be grouped for payroll tax purposes if:
    • they are related bodies corporate within the meaning of the Corporations Act 2001 (Cth)  - this relationship is commonly known as a holding and subsidiary relationship
    • they use the same employees
    • the same people have controlling interests in a number of businesses
    • 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.
  • If an employer is grouped for payroll tax purposes, the group’s total Australia-wide wages determine the employer’s payroll tax liability.
  • An Ordinary Group Employer is not entitled to claim the ACT tax-free threshold
  • Refer Designated group employer (DGE) for a group – this outlines where a group member is entitled to claim the threshold

  • All ordinary group employers must lodge their own payroll tax return.
Example
  • Luigi’s Linguini Pty Ltd, Anthony’s Antipasto Pty Ltd and Papa Pepe’s Pizzeria Pty Ltd are all grouped for payroll tax purposes.
  • Luigi’s Linguini Pty Ltd and Anthony’s Antipasto Pty Ltd are ordinary group members as Papa Pepe’s Pizzeria Pty Ltd has been nominated as the designated group employer for the group (see section 2).
  • Luigi’s Linguini Pty Ltd and Anthony’s Antipasto Pty Ltd are not entitled to claim the tax-free threshold in the ACT. Each company pays ACT payroll tax at the flat rate of 6.85 per cent of their taxable wages.

What is a group?

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 - Refer to meaning per section 50 of the Corporations Act 2001 (Cth)
  • Use a common set of employees
  • The same people have a controlling interest in two or more businesses
  • 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
Example One

  • Company 1 is 'Grouped' with both Company 2 and Company 3.
  • Company 1 is the holding company of both Company 2 and Company 3, because it holds more than 50 per cent of the shares of each company.
  • Company 2,4 and 5 are 'Grouped' because Company 2 is the holding company of both Company 4 and 5.
  • All of the companies in this example are grouped because Company 1 is the ultimate holding company.
  • Paul Primrose has a controlling interest in Company 6.
  • Paul Primrose is deemed to have a controlling interest in Company 7 via his controlling interest in Company 6.
Example Two

Incorrectly declaring your employer status or business activity or group structure may result in your business over-paying or under-paying its payroll tax liability.

All employers registered for Payroll Tax in the ACT must declare correct and current information on their monthly and annual Payroll Tax Returns.

Correct information refers to declaring the accurate (current) employer status and grouping structure of the employers, as well as correct taxable wages.

Failure to declare correct information may trigger a Compliance investigation on behalf of the Commissioner for ACT Revenue.  Compliance action against a false declaration may result in penalty tax and interest charges being imposed.

Providing false or misleading information on your application is also a serious offence under the Criminal Code 2002.

Example
  • Turnip Concreting Company Pty Ltd operates in a number of jurisdictions, including the ACT.
  • Following an investigation into Turnip Concreting Pty Ltd, it was found they were paying wages throughout Australia in excess of the annual threshold.
  • The company failed to comply with requests made by the ACT Revenue Office to establish the extent of its business in the ACT by refusing to register and complete associated forms.
  • Turnip Concreting Pty Ltd was found to be in breach of the requirements under the Taxation Administration Act 1999 to be accurate and timely with it’s information.
  • An assessment was issued to Turnip Concreting Pty Ltd for outstanding Payroll Tax and associated penalties at 90% of the outstanding liability;  interest was also issued.

If there have been changes to your group structure or employer status you must notify the ACT Revenue Office immediately or phone us on (02) 6207 0028.

You can notify the ACT Revenue Office of any changes to your employer status by completing the Application to nominate a Designated Group Employer (DGE) or a Joint Return Lodger (JRL) for ACT Payroll Tax form.

This will ensure that the required changes are made to our records and you are provided with any additional information relevant to you, which may include changes to your payroll tax liability.

Disclaimer

The information provided on this website is not legal advice and you should not rely on it as if it is legal advice. This information is a guide only.

Working out an employer’s payroll tax liability, including whether employers are members of a group, under the 
Payroll Tax Act 2011 is complex and information on this website may not take into account your particular circumstances.

No information on this website, including information generated by responses entered by you, should be treated as advice about payroll tax grouping or an assessment of any person’s payroll tax liability under the Payroll Tax Act 2011 or any other tax law. An assessment of your payroll tax liability will be made once you have submitted all relevant information to the Commissioner for ACT Revenue, and that assessment may be different from information shown on this website after relevant information is taken into account.

For more information about payroll tax grouping, please refer to the circulars and legislation on our related resources page or contact us by telephone on (02) 6207 0028.