Using Payroll Tax Manager

How it works and frequently asked questions

Support  |  Payroll Tax Manager support

Payroll tax is a state based tax and despite some harmonisation of rules between states, there are still many state based variations.

Paytools Payroll Tax Manager automates the calculation of your monthly included earnings for payroll tax and estimates your state liability.

Important note for using Payroll Tax Manager: Due to the changing rules in payroll tax, we have not included every concession or threshold that may apply (e.g. COVID provisions, regional employer concession). Therefore payroll tax manager may not always be a true representation of your liability for your particular state or circumstances.

Be sure to check out each state’s individual payroll tax website to check your specific situation.

Initial Setup

Confirm employee work locations for payroll tax

To ensure we allocate employee earnings to the right state, you’ll need to review employee locations.  We’ve defaulted the employee’s home state as their work location but you can select another state.

Payroll tax manager mapping

What if my employees work across different states or overseas?

All states have developed a four tier test (nexus provisions) for these scenarios. According to https://www.payrolltax.gov.au/revenue (Revenue Ruling PTA039) all states have harmonised the rules for nexus provisions.

For a good explanation of the nexus provisions read this article.

Review earnings pay items included for payroll tax

Payroll tax applies to employee earnings including wages, paid leave and super guarantee.

Paytools automatically marks pay items that should be included although you should review as each state has different rules as to what is included or exempt from payroll tax.

How do I know what earnings are included for payroll tax?

Despite the definition of earnings being harmonised across all states, there are some differences.

Run Payroll Activity Summary in Xero
  • Shows what pay items you’re using
  • Mark old ones as in-active
QLD https://www.business.qld.gov.au/running-business/employing/payroll-tax/taxable-wages/wages
NSW https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax/wages
VIC https://www.sro.vic.gov.au/exempt-wages-and-organisations
ACT https://www.revenue.act.gov.au/payroll-tax
TAS https://www.sro.tas.gov.au/payroll-tax/taxable-exempt-wages
SA https://www.revenuesa.sa.gov.au/payrolltax/wages
WA https://www.wa.gov.au/service/financial-management/taxation-and-duty/apply-payroll-tax-exemption
NT https://treasury.nt.gov.au/dtf/territory-revenue-office/payroll-tax/exempt-rates-motor-vehicle-and-accommodation-allowances
Earnings

Using Payroll Tax Manager

Manually adjust your monthly included earnings

Paytools automatically picks up included earnings from pay runs where the payment date is in the calendar month.

There may be times when you want to add taxable wages that are outside of Xero or not picked in the normal Xero pay runs. Use the manual adjustment to make changes to any  earnings category. You can also revert and always see the original value from Xero.

Payroll tax adjustment

Once adjusted, you’ll be able to see that changes were made at the summary level.

Payroll tax summaries

Hope you found this article helpful! If you have any additional questions about payroll tax manager, get in touch. Our friendly Melbourne-based team is always happy to help.