Training Session 14 05 02 2021 Payroll 2 Payroll tax 15
Summary
TLDRThe video script discusses payroll tax, a state-specific tax levied on employers, highlighting its monthly calculation and the importance of timely payment by the 7th of each month. It also touches on the impact of COVID-19 on tax thresholds and the necessity to stay updated with state revenue offices. The script further explains Fringe Benefits Tax (FBT), which targets non-cash benefits provided to employees, emphasizing its complexity and the highest marginal tax rate applied. The speaker stresses the importance of accurate FBT calculations and staying informed about tax changes.
Takeaways
- 📊 Payroll tax is a state-specific tax levied on employers, with varying rates depending on the state.
- 🗓 Payroll tax is calculated on a monthly basis and must be paid by the seventh of each month.
- 💻 There is usually an online portal for uploading payroll information and making the tax payment.
- 🔑 Payroll tax includes payments for wages, superannuation, and any applicable fringe benefits tax (FBT).
- 💡 FBT is a tax on non-cash benefits provided to employees, such as gym memberships or school fees, meant to deter employers from avoiding regular payroll taxes.
- 🔄 The threshold for FBT has recently changed due to the impact of COVID-19, with adjustments in different regions.
- 📈 FBT is taxed at the highest marginal rate, which can be as high as 47%, to discourage employers from offering such benefits.
- 🔍 It's important to verify information and check state-specific websites for the most current tax regulations, especially with changes due to COVID-19.
- 🚫 FBT can apply to a wide range of benefits, including meals, parking, and even company cars, making it complex and requiring careful accounting.
- 🛠 For smaller clients, FBT may not be a concern, but for larger clients, it's crucial to be aware of different coding methods and FBT calculation approaches.
- 📚 Training on FBT will be provided when necessary, ensuring that individuals are equipped with the knowledge to handle FBT-related tasks.
Q & A
What is the nature of payroll tax according to the transcript?
-Payroll tax is a state-by-state tax levied against employers, varying in rate depending on the state. It is calculated on a monthly basis and must be paid by the seventh of each month.
How is payroll tax typically handled in practice?
-Payroll tax is usually calculated and paid through an online portal where all the necessary information is uploaded and the amount due is paid on wages, superannuation, and any applicable fringe benefits tax.
What is the significance of the threshold mentioned in the context of payroll tax?
-The threshold, which is subject to change, determines the amount of wages below which payroll tax may not be applicable. As of the transcript's information, it was recently changed to 1.2 million due to the impact of COVID-19.
What is the importance of checking the Office of State Revenue website?
-Checking the OSR website is crucial to stay updated on any changes in payroll tax regulations, ensuring that calculations and payments are accurate and up-to-date.
What is Fringe Benefits Tax (FBT) and why was it introduced?
-Fringe Benefits Tax is a tax on non-cash benefits provided to employees, introduced to prevent employers from avoiding pay-as-you-go tax and superannuation by offering employment benefits instead of salary.
How is the tax on fringe benefits calculated?
-Fringe benefits are taxed at the highest marginal rate, which means they are 'grossed up' to the value they would have if the employee had received the money as salary and then paid tax on it.
What are some examples of fringe benefits mentioned in the transcript?
-Examples include paying for an employee's wife's gym membership, children's school fees, or providing free parking within a certain distance from the workplace.
Why is it important to be cautious with FBT calculations?
-FBT calculations are complex and can be high risk; therefore, it's important to verify information and not rely solely on outdated notes or assumptions to avoid errors.
How can one stay informed about changes in tax regulations due to events like the coronavirus pandemic?
-By regularly visiting state tax websites and scanning for updates, one can keep abreast of changes in tax regulations and initiatives that may affect payroll and fringe benefits tax.
What advice is given for handling tax calculations when there is uncertainty or risk?
-The advice given is to always check the latest information on the relevant tax authority's website before proceeding with calculations, especially when dealing with high-risk tax areas.
What is the implication for smaller clients regarding FBT?
-For smaller clients, FBT may not be relevant or necessary to worry about, but it's important to be aware of it in case it becomes applicable in the future or for larger clients.
Outlines
💼 Payroll Tax and Its Calculation
The script discusses the concept of payroll tax, which varies by state and is levied against employers. It is calculated monthly and must be paid by the 7th of each month. The process involves using an online portal to upload information and make payments related to wages, superannuation, and fringe benefits tax. The speaker mentions a recent change in the threshold for payroll tax due to the COVID-19 pandemic, emphasizing the importance of staying updated with the latest information from state revenue offices to ensure accuracy in tax calculations.
🚫 Fringe Benefits Tax and Its Implications
This paragraph delves into fringe benefits tax (FBT), which was introduced to discourage employers from avoiding pay-as-you-go tax and superannuation by providing non-cash benefits to employees. FBT applies to payments or benefits given to employees or their relatives, which are considered taxable at the highest marginal rate. The speaker explains that even small benefits, such as gym memberships or school fees, are subject to FBT and must be grossed up before being paid out. The complexity of FBT is highlighted with examples like business meals and parking provisions, which can be considered fringe benefits. The speaker advises that tax accountants typically handle FBT but warns that in some cases, clients may require different coding methods, which should be known and applied when necessary.
Mindmap
Keywords
💡Payroll Tax
💡State Revenue
💡Calculation
💡Superannuation
💡Fringe Benefits Tax (FBT)
💡Threshold
💡Grossing Up
💡High Marginal Rate
💡Tax Deductible
💡Tax Accountants
💡Coding
Highlights
Payroll tax is a state-by-state tax levied against the employer with varying rates.
Payroll tax must be calculated monthly and paid by the 7th of each month.
A portal is used to upload payroll tax information and make payments.
Payroll tax also covers wages, superannuation, and fringe benefits tax.
Fringe benefits tax (FBT) was introduced to prevent employers from avoiding pay-as-you-go tax and superannuation.
FBT applies to any payments that benefit an employee or their close relatives.
FBT is taxed at the highest marginal rate of 47%.
Benefits provided by employers, such as gym memberships or school fees, are considered payroll under FBT.
FBT requires grossing up the benefit amount before tax payment.
Employers are discouraged from offering certain benefits due to the high FBT rate.
Tax accountants usually handle FBT calculations, but in some cases, clients may require different coding methods.
For smaller clients, FBT may not be a concern, but for larger clients, awareness of different coding methods is important.
Staying updated on tax changes and initiatives is crucial, especially during times of crisis like the COVID-19 pandemic.
State websites provide valuable information on tax changes and updates.
It's important to verify information from official sources rather than relying solely on notes or outdated information.
Training on FBT and payroll tax will be provided when necessary.
The FBT threshold has recently changed due to the impact of COVID-19.
In Australia, the FBT threshold has decreased to around 5%, down from 5.45% previously.
Transcripts
um okay so
the other thing i wanted to talk about
just briefly again i'm putting concepts
down now
is payroll tax payroll tax is a state by
state
tax it's levied against the
employer um and
you know when when you're hiring people
depending on what state you're in the
rate is different
each time it's something that is
calculated on a monthly basis
and by the seventh of the month we need
to pay it so
this is something that you'll be doing
you'll be calculating and then usually
there's a portal that we go into
we upload all the information and we pay
the amount
we pay it on wages superannuation and
any fringe benefits tax
um i'll briefly touch on uh fbt as well
next um
and so then that amount is paid there is
a threshold and there it's a calculation
and i have mentioned that to you before
you will be trained in it when the time
comes and if your client has it
um i think the threshold now is 1.2 mil
it only it's only recently changed and
it's changing because of covert
um and i think in australia it's come
down to five point
something it used to be 5.45 for a very
long time
i'm not doing it regularly anymore but
it doesn't mean i don't know how to do
it and if i did
do it i would immediately go in and
check you know i wouldn't even if
somebody gave me the work to do and they
gave me all the information i wouldn't
do it unless i checked myself and i'd go
on the website
um you know osr office of state revenue
depending on which state it is and i
would read the information myself
before i would actually proceed
especially if it's something new i would
always
if it's high risk like that i don't want
to get it wrong i'm not going to just
trust the notes that i've got because
they could be outdated especially when
if you keep aware of what's happening
you know there's been changes
coronavirus has impacted you know every
country there are
you know initiatives out there and there
are a lot of state websites that you can
go
to and scan and just to keep abreast of
stuff it's really good
so fringe benefits tax i did mention
this a bit before
this is when employers tried to get away
with paying
pay-as-you-go tax and superannuation and
employment benefits
and they said i'm going to pay your
wife's gym membership where i'm going to
pay your kids school fees
so they introduced fringe benefits tax
they said
any payments that act as though
any payments that benefit an employee
employee or an employee's close relative
are considered payroll and they're
considered that they're taxed at the
highest marginal rate
which was 47 so that means that you
would need to
imagine if um if my employer paid me
a hundred dollars benefit
let's say gym fees if i had to pay that
for my pay
i would have had to gross it up first
and pay tax on it and then pay the
hundred dollars
so that's why the fringe benefits tax
gets grossed up
but it gets grossed up at the highest
rate so if i
paid it and i was on a lower rate i'd
probably have it wouldn't be that much
but they want to kind of penalize the
employers
to not do it um to not offer these
benefits
as much but if they do they're going to
pay at the highest marginal rate
um and so you know even for example
chris and i
if you know we um we don't run any cars
through our company or anything like
that but let's say if we do
meals sometimes so this is how strict so
you know this is how strict fbt can be
um you know if for example you go out to
lunch
and you're an employee um it's treated
you there's certain methods i'm just
going to say this briefly so you get
how complex it is and it's not something
that you have to focus on right now but
if you're with a client the client's
portion of the meal
so they imagine you're eating a meal the
client's portion of the meal
is non-tax deductible but the employees
portion
um if you pay for if you pay french
benefits
tax it is right so it's really really
and if
say for example you provide a free
parking for an employee
and um there's a parking station i think
it's a hundred meters or something
within that space
then that's considered a fringe benefit
because if you didn't provide the
parking they would have had to pay for
the parking space
like finished benefit they've like got
this whole
list of stuff that is crazy like usually
luckily the tax accountants will deal
with it but in some instances depending
on the client and you'll be told
we need to code things differently
depending on what method but you will be
told
and if it's a smaller client it may not
be something that's relevant
that you have to worry about but just
knowing that it's there and if it is a
larger client being aware
that you might have to code things a
little bit differently and
you know ask what method is being used
but for now
know it's there in time you'll be
exposed to it and you'll be um trained
more on it
um
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