Payroll tax is one of the many aspects of running a business that can be very complicated and confusing. A payroll service may be the solution for you if you are not informed of the tax laws and aware of all of the ins and outs of payroll for your business.
The Definition of Payroll Tax
Payroll tax is simply the federal tax on all of the wages that you pay your employees. This also includes deductions and bonuses that employees receive, such as superannuation funds and fringe benefits. In Australia, each territory and each state is responsible for its own payroll tax laws. This means that being able to successfully run a business in Australia can be very difficult at first. It is crucial to understand the payroll tax laws for your state, which is why payroll outsourcing can be a huge help to you and your business. More here.
History of Payroll Tax in Australia
There is actually quite a long history behind the payroll taxation process and payroll services that we see in Australia that we see today. So as not to take up too much time, we will simply summarize the highlights throughout Australia’s history:
In Australia’s early tax history, dating around 1901, the taxation process that was in place was very unequal across the states. Indirect taxes were the ones that increased in order to provide and sustain the current revenue needs.
After the two World Wars
Around 1941, the payroll tax was initially introduced as a way to help fund a national endeavor for child endowment. It was then also used in 1942 as a way to fund what would be called the widows’ pension. When these both met with success, it was also used for helping the nation recuperate from the massive world wars by supplying unemployment relief. Due to all of the growing needs in Australia, this tax experienced a sharp rise for a number of years, specifically around the 1960s and 70s.
Payroll Taxes Today
Looking at payroll taxes today, the states now have full control over their particular payroll tax laws as they were able to obtain this from the federal government back in 1971. While the system remains very complex today, the actual rate is not as high as it once was, averaging at about 5% across Australia. Payroll services are a very popular means today to ensure that businesses are able to work with professionals in this area.
Payroll Services in Australia
While Australia’s payroll taxes remain some of the most complex in the world today, there are various ways to ensure that your business runs smoothly. One of these is through payroll outsourcing, which involves handing over control of all of your payroll needs to a professional service. They can help you monitor all of the financial aspects of your business as well. This makes this kind of service one of the biggest assets that you can have moving forward for you to achieve financial success.
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