Frequently asked questions
Payroll tax is a self-assessing tax and you are therefore responsible for registering with us, lodging monthly returns, paying tax and completing your annual reconciliation.
If you do not meet your payroll tax obligations, we may issue you with an assessment to cover your payroll tax shortfall, as well as penalty tax and/or interest.
Why is penalty tax applied?
Penalty tax is issued when there is a failure to meet a tax obligation. Interest charges are imposed on outstanding amounts, such as shortfall amounts, late payments and unpaid tax debts. Penalty tax and interest are imposed to encourage compliance with the law.
What is the ordinary rate of penalty tax?
The ordinary rate of penalty tax is 25% of the payroll tax which was not paid on time. In some situations, the rate of penalty tax may be increased or reduced from the ordinary rate.
When does a higher rate of penalty tax apply?
A penalty tax rate of up to 90% may apply in situations where someone has intentionally disregarded their payroll tax obligations and where they have concealed information during a State Revenue Office investigation.
When does a lower rate of penalty tax apply?
The penalty tax rate may be reduced to 5% where there has been a voluntary disclosure to us before an investigation has started.
A reduction to 20% may occur where there has been a voluntary disclosure to us after we have started an investigation.
Penalty tax will not be applied where we believe a taxpayer has taken reasonable care to comply with their payroll tax obligations, or where circumstances beyond their control have led to the failure to meet their tax obligations. However, interest may still be charged in these situations.
Can I object to my penalty tax and interest?
If you believe you should not have been charged penalty tax and interest, or should have been charged less, you have the right to lodge an objection.
An objection is a formal avenue of dispute resolution and requires you to state your detailed reasons in writing, with relevant supporting documents.
Is there anything I should do before I object?
You should consider the following:
- If you made a voluntary disclosure before or during an investigation, or if your payroll tax shortfall was due to an oversight, and we have already taken this into account in applying penalty tax, it is unlikely your objection will be successful unless you can provide additional reasons and documentation to justify a further reduction.
- Interest imposed at market rates represents compensation to the State Government to cover the costs of your payroll tax shortfall. It does not constitute a penalty. We therefore do not ordinarily reduce interest, even if you have taken reasonable care to comply with your obligations, or circumstances beyond your control have caused your failure to comply.
- The fact that you did not know you had a payroll tax liability, or that you were not told by your accountant or adviser, does not ordinarily justify a reduction of penalty tax or interest.
- Financial hardship does not ordinarily justify a reduction of penalty tax or interest.
Even if you have lodged an objection, you must still pay your assessment in full by the due date. If your objection is successful, you will receive a refund.
What if I can’t pay the full amount by the due date?
You can apply, via our website, to pay your assessment by instalments.
Revenue Ruling — interest and penalty tax
Read our comprehensive ruling on payroll penalty tax and interest.