Grouping
Businesses that are grouped for payroll tax can only claim one tax free threshold and are jointly and severally liable for any outstanding payroll tax.
What is a business?
A business for payroll tax grouping purposes can include businesses paying wages; any activity carried on for fee, gain or reward – regardless of whether wages are paid; any form of trust; and any entity that holds money or property in connection with another business.
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What constitutes a group?
A group can be constituted under payroll tax legislation in 5 ways:
- 1) Related companies
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All corporations that are related within the meaning of the Corporations Act 2001 are grouped.
- 2) Use of common employees
- 3) Common control
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Two businesses are grouped when a person or set of persons together either as a director, shareholder, partner or beneficiaries of a trust have greater than 50 percent control of each business.
- 4) Tracing of interests in corporations
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An entity and a corporation form part of a group if the entity has a controlling interest in the corporation.
- 5) Subsuming
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A larger group can be formed out of smaller groups.
How does the group threshold work?
Only one member of the group can claim the group’s NSW threshold entitlement.
A group may choose one of two ways to use the threshold entitlement:
1) A business with NSW wages in excess of the group’s NSW threshold entitlement can claim the full threshold and remaining group members pay at a flat rate. This member is known as the Designated Group Employer (DGE)
or
2) One member of the group becomes the group single lodger and includes the total NSW group wages in their return. No other group member lodges a return. This is mandatory if no one NSW employer has sufficient wages to claim the threshold but is optional for any other group.
Can a business be excluded from a group?
A business that is grouped (other than a related corporation) may apply in writing to be excluded from the group.
The Chief Commissioner of State Revenue may grant an exclusion if satisfied the business is carried on independently and not connected with any other group member. When making a determination the Chief Commissioner will take into consideration any matters he considers relevant in addition to the nature of the business and nature and degree of ownership and control.
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