Payroll Tax changes 2017/18 for Victoria:

Legacy KB ID: 5546

Question

Why is the State Payroll Tax for Victoria calculating incorrectly? I have installed the latest tax table update.

Answer

For 2017/18 onwards, Payroll Tax in Vic is going to be charged at a different rate for Businesses where over 85% of their Payroll wages goes to Regional workers. (3.65% instead of 4.85%) and the threshold is $625,000.

(Please Refer to ATO or your accountants for more details on the changes)

Unfortunately Reckon Accounts Business Desktop and Hosted is unable to implement this change, as this announcement came after the tax table was finalised.

The below workaround is provided to calculate it manually.

We apologise for any inconvenience caused.

Workaround:

If you are processing payroll in Victoria and is eligible to pay state payroll tax, please follow the below procedures to calculate the tax manually.

  1. Go to Report menu -> Employees and Payroll -> and State payroll Tax summary report.
  2. Export the report to Excel.
  3. Save the Excel report in your PC, where you can open and edit it. (If you are using RA hosted, save the report to Q: drive and download it to your local PC)
  4. Open the report in Excel.
  5. Change the Threshold amount to 625,000 (changes as of 2017/18)
  6. Correct the amount for Taxable amount. Correct amount is calculated as (Total Included amount minus threshold)
  7. Go to the Percentage Row and change the percentage to 3.65% as of FY2017/18 .
  8. Go to Payroll tax Liability for VIC Box and enter the formula as (Taxable amount * 3.65 % or Taxable amount X 0.0365)
This will be the correct tax amount you are liable to pay for Victoria.\

Note: if you have employees from other states too, in this report, please update the Payroll tax liability for all states as well.


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