On 1 July 2017, a reduced payroll tax rate of 3.65 per cent was introduced in Victoria for regional employers paying at least 85 per cent of their wages to regional employees.
You are a regional employer if you:
- Are based in regional Victoria (which means your ABN registered address must be in regional Victoria or if you don’t have an ABN, your principal place of business is in regional Victoria), and
- Pay at least 85 per cent of your Victorian taxable wages to regional employees - the 85 per cent rule applies to both your monthly returns and to the total Victorian wages you declare in your annual reconciliation.
For an employee to be considered regional they must have performed more than 50 per cent of their duties in regional Victoria during a month. Regional Victoria includes 48 council areas and the six alpine resorts. See our website for a full list.
Businesses that are grouped for payroll tax are individually assessed for their eligibility for the regional tax rate. More information on grouped businesses can be found on our website.
Payroll tax is a self-assessing tax. Employers are able to claim the reduced rate when lodging their monthly returns. You must meet all eligibility criteria to claim the reduced tax rate.
If you realise you have claimed the regional rate in error you should:
- Stop claiming the regional rate on your monthly returns,
- Re-lodge those monthly returns where the regional rate was incorrectly claimed, and
- Enter your full year wages without selecting the regional rate in your annual reconciliation
- It is the employer’s responsibility to ensure that the correct wages are being declared.
If you are unsure of your payroll tax obligations or your eligibility for the regional payroll tax rate, please visit www.sro.vic.gov.au/ptxregional.