Payroll Tax Deferral Granted to Victorian Businesses Amid Lockdowns

In the wake of Victoria’s fifth lockdown, many of Australia’s small businesses are struggling to stay afloat following the continuous disruption to operation and opportunities to trade.

In response, the State Government has announced further support for businesses in varying forms such as deferrals for the payment of payroll taxes, which may be paid in instalments across the following financial year.

To help business owners remain informed and fully understand what support is on offer and who is eligible, here is a summary of how the relief will help small businesses.

What’s on Offer?

Businesses will be provided with the opportunity to defer their payroll taxes from the 2020-2021 financial year, instead paying it in four quarterly instalments during the 2021-2022 financial year.

Is My Business Eligible?

All Victorian businesses with a payroll under $10 million across the 2019-2020 financial year will be eligible for deferring their 2020-2021 payroll tax liability.

How Will it Work?

The payroll tax liability to be deferred will be determined from the lodgement of a business’ annual reconciliation report for the 2020-2021 financial year. Each instalment is required to be paid on a quarterly basis, with the first instalment required on 7 September 2021. At least 25% of total payroll taxes will be required, with the following instalments being due exactly three months after 7 September.

A breakdown of the remaining instalments can be seen below:

  • At least 50% of the 2020-21 liability will be due on 7th December 2021.
  • At least 75% of the 2020-21 liability will be due on 7th March 2022.
  • Any outstanding balance of the 2020-21 liability will be due on 7th June 2022.

This deferral relief applies to each employer – meaning membership in a payroll tax group is not considered in determining whether a member’s Victorian taxable wages for the 2019-2020 financial year have exceeded the $10 million threshold.

To be eligible for this payroll tax deferral, an employer must lodge their annual reconciliation form by the 21st of July 2021 for the previous financial year. Additionally, the annual reconciliation return for the previous financial year must be submitted by no later than 27 August 2021. If an employer fails to lodge their annual reconciliation by either date, then they will not be eligible for the tax deferral and must pay any tax owing immediately.

How Will it Help My Business?

This measure from the Victorian government will provide struggling businesses with more time and flexibility to retain the important cash on hand required to survive the effects of Victoria’s lockdown. Victorian business owners can take advantage of this deferral to worry about more pressing liabilities and alleviate concerns about the logistics of affording payroll tax in the middle of a lockdown.

Further information about coronavirus payroll tax relief incentives for Victorian businesses can be found at the State Revenue Office’s website.

To discuss your eligibility for this business support or to discuss how payroll tax relief can help your business, contact a Morrows adviser today.

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