The mental health and wellbeing surcharge (surcharge) is a revenue mechanism that will provide a stable and dedicated form of additional funding for the mental health system. This represents one of the recommendations made by the Royal Commission into Victoria’s Mental Health System and the Victorian Government has 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 surcharge commenced from 1 January 2022 and is payable on Victorian taxable wages paid or payable from 1 January 2022 by an employer or a group of employers.
The surcharge is payable at the same time that payroll tax is payable. Therefore, if you pay payroll tax monthly, you will also pay the surcharge monthly and if you pay payroll tax annually, you will pay the surcharge annually. You will not need to lodge separate returns.
Who pays the surcharge?
You must pay the surcharge 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 surcharge 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.
These annual thresholds are adjusted proportionately if you are not an employer for a full financial year. In respect of the period from 1 January 2022 to 30 June 2022 (transitional period), the respective annual thresholds are $5 million and $50 million.
Wages that are subject to Victorian payroll tax will also be subject to the surcharge and 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 surcharge.
How much is the surcharge?
The amount of the surcharge 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. For the transitional period, the respective annual thresholds are $5 million and $50 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.