Payroll tax is a self-assessed, general purpose state and territory tax assessed on wages paid or payable by an employer to its employees, when the total wage bill of an employer (or group of employers) exceeds a threshold amount.
The payroll tax rates and thresholds vary between states and territories.
Workers compensation is governed by individual Australian States and Territories. It is a form of insurance payment to employees if they are injured at work or become sick due to the work.
The workers compensation rates vary. These are based on the industry rates which are based on the claim costs of all employers in the same industry.
Returns are lodged, and payment of liability made, at an agreed frequency (monthly, quarterly, or annually) to the respective revenue office in the Australian state and/or territory in which the wage payment is deemed liable.
Payroll Tax Rates and Thresholds can be viewed at the following website:
Workers Compensation is best to view the following website:
Parameter
Payroll > Global Setup > Parameters
Module | ID | Description | Value |
PR | PR-PTAXACCRUE | Accrue payroll Tax as you go | Y or N |
PR | PR-PTAXCAS | Include Casual Employees in Payroll Tax Calculations (employee count and gross) | Y or N |
The below payroll parameters will affect how Payroll Tax is being calculated within COINS.
Payroll Tax Configuration
States
Payroll > Global Setup > AUS Specifics > States
Each state code must be defined before adding a related jurisdiction in ‘Oncost % Configuration’.
2. Comp Codes
Payroll > Global Setup > AUS Specifics > Comp Codes
Comp Codes allows you to set up a standard list of Workers Compensation codes required for your company's work for use by the Payroll "module", code must be defined before adding a related jurisdiction in ‘Oncost % Configuration’.
3. Oncost % Configuration
Payroll > company Setup > Oncost % Configuration
For Australian payroll a ‘Tax Authority Type’ value = FED must be defined for each company and assigned to the ATO supplier. This will ensure all PAYG will be processed via Purchase Ledger invoice once payroll is posted.
On adding a new Tax Authority for each state COINS will prompt user to select Tax Authority Type, in this case it will be STATE.
Set the Taxing Authority to new created state. In this example we have Western Australi.
E.g. WA
4. Main
Add all relevant information for the state payroll tax and workers comp. Left-hand side of form relates to Payroll Tax and the right-hand side refer to workers comp information. Each state must hold a date effective for new rates to take effect. Employer ID used for the Super Employer ID with Clearing House.
State Info:
Enter the payroll tax information relevant for new state
Field | Description |
State Min. Wage | Min wage for state set to $0.00 |
Min Amount over which payroll tax is applicable | Payroll Tax annual threshold amount for state. Refer to the website for applicable threshold |
Payroll Tax % | Tax rate for state. Refer to the website for applicable rate |
GL Account | Payroll Tax Credit GL account e.g 0.100.7L08.TTL |
LSL Prorata Years | Number of years for LSL prorate balance |
LSL 1st Entitlement | Number of years for 1st entitlement |
LSL 2nd Entitlement | Number of years until 2nd entitlement |
LSL 2nd entitlement every so many years | LSL after 2nd entitlement can be taken after every subsequent year. |
Workers Compensation Carrier Info:
Enter the workers comp information relevant for new state.
Field | Description |
Carrier | Enter the workers comp insurance carrier |
Effective Date | Same as the effective date for state record e.g. 01/07/2018 |
Workers Comp % | % applied for the company |
GL Account | Workers Comp credit GL account 01.00.7L09.TTL |
Policy Number | Not relevant for AUS, set to default 9999 |
NOTE:
‘Oncost % Configuration’ are company specific rates.
5. Comp Codes
Allows configuration of Workers Compensation Code used for the Tax Authority
Employee Maintenance
Once the ‘Oncost % Configuration’ has been completed, the decision is how does COINS ensure the employee is taxed in the correct state.
Payroll > Employee Maintenance > Profile Tab
Each employee is assigned to a Home State.
1. Sate Details Tab
An employee may be required to have more than one state. For example, the employee may live in one state but work in another state.
Payroll > Employee Maintenance > State Details
This allows you to set up multiple state records for an employee.
Home - Whether this is the employee home state of residency
Primary Work - Select if the state is where the employees primary work
place is for Payroll Tax
Primary Work Comp - Select if the state is employee primary workers comp state
for workders comp calculations
Primary Work Comp Code - Workers Comp State Code for Workers comp calculations
NOTE:
This information will default to the employee timecard BUT a timecard can be overridden if the timesheet entry was to be calculated for a different state. Refer to Timecard sections
2. Timesheet Defaults
Whether a timecard is manually entered or imported the payroll tax and workers comp state can be modified on the individual timecard. Once a timecard is created the default State information will come from the employee master record.
The following examples are based on the Oncost % configuration for the following States
3. PTAX and WC same State
Configuration on State Details for when employee is working in a single state.
When a timesheet is Added all fields will default to QLD
In the payroll report both PTAX and WCTAX are using QLD calculations
Ord 2134
RDOA -80
SUPG 195.13
TAXABLE WAGES FOR PTAX AND WC = 2249.13
PTAX taxable Gross 2249.13 * 4.75% 106.83 QLD rate
WC taxable Gross 2249.13 * .72% 16.19 QLD rate
4. PTAX and WC Different State with Home state = WC state
Payroll tax QLD
Worker Comp NSW with NSW also being home State
Primary Work relates to the state required for payroll tax calculations
Primary Work comp relates to the state required for Workers’ comp calculations
Ord 2134
RDOA -80
SUPG 195.13
TAXABLE WAGES FOR PTAX AND WC = 2249.13
PTAX taxable Gross 2249.13 * 4.75% 106.83 QLD rate
WC taxable Gross 2249.13 * 3.08% 69.27 NSW rate
5. PTAX and WC Different State with Home State = PTAX
Payroll tax QLD with QLD also being home state
Worker Comp NSW
Primary Work relates to the state required for payroll tax calculations
Primary Work comp relates to the state required for Workers’ comp calculations
The results are the same as section 5.2 as the HOME state does not affect the PTAX or WC default fields in the Timesheet.
PTAX taxable Gross 2249.13 * 4.75% 106.83 QLD rate
WC taxable Gross 2249.13 * 3.08% 69.27 NSW rate
Timesheet Fields used to calculate PTAX and WC
To demonstrate what fields are used in the timesheet defaults for payroll tax and workers compensation, it is best to define a unique state in each field.
Ord 2134
SUPG 202.73
TAXABLE WAGES FOR PTAX AND WC = 2336.73
PTAX taxable Gross 2249.13 * 4.95% 115.67 SA rate
WC taxable Gross 2249.13 * 3.08% 71.97 NSW rate
Payroll State field will be used to calculate Payroll Tax
WC State field will be used to calculate Workers Comp
COINS recommends that Section 5 configuration examples should be used and not the above configuration.