PAYROLL BLOG: WHAT IS PAYROLL TAX?

Payroll tax is taxation scheme based on Australian State and Territory and it works in Australia. It’s all calculations are self analyzed. Fringe benefits, superannuation and wages are important points for its calculations. Each territory and state has set a percentage value which is important in calculation, along with the specific threshold for the taxation to be payable. In every July an annual reconciliation is performed for the receptive fiscal year in which this ratio and threshold value is indexed bi-annually or annually payments that are made to the different office employers monthly. In simple words this tax has been imposed on the salaries of employees and it’s also called payroll service Australia.

Shifting from federal to state government

In 1941, federal government started funding a national scheme for which payroll tax was introduced. 2.5 percent of tax was funded to payrolls for this scheme. In 1971, all the payroll tax was handed to state government by federal government, admitting that this was the only available growth tax to the states. At that time the federal government was handling income tax. In next three years the state government has increased 5 percent tax uniformly.

Payroll tax in different countries

Australia

PAYG (pay as you go) is a system under which the federal government of Australia imposes withholding tax on income of employees.

Bermuda

In Bermuda, annual national budget’s one third part is accounted by payroll tax and making it the basic cause of government income. Employers paid this tax which is based on their full salaries that they paid to all employees, at a rate of 14 percent. 4% of an employee’s pay is deducted by the employers because they have right to do it legally. Employers can also deduct another tax which is called Social insurance.

Brazil

11 percent of an employee’s incomes are cut down by employers for the purpose of Social Security and some part is withheld as Income tax. But there is a duty of employer is to add 20 percent of the complete payroll tax to Social Security system. If condition of employer’s company is good then he must have to donate to educational and insurance programs that are funded federally. All the banks of Brazil withheld 8 percent of employee’s salary for the betterment of an employee himself.  It will be used in time of crisis like during illness, when the employee is fired or under any other conditions.

Canada

In Canada 2 percent payroll tax service is applied to all employees. It is an example of the second type of payroll service. In some jurisdictions payroll tax is directly paid by the employee, not by the employers. It is different from the first type of payroll tax that was applied in Canada.

China

In China, there is a specific tax that is paid to the territories and provinces by employers this is called payroll tax, it’s not paid by the employees. Workers pay this tax from his/her salary. PAYG are the only tax that is withheld by the Chinese Government from paychecks of the employees, this tax includes medical care.

Read more in our post here: http://www.yourcreditcardcompanies.com/small-business-payroll-challenges-top-10-things-to-consider/

Leave a Reply

Your email address will not be published. Required fields are marked *

Protected by WP Anti Spam