The Mental Health and Wellbeing Payroll Tax Surcharge will commence from 1 January 2022 and is payable on Victorian taxable wages paid or payable from 1 January 2022 by an employer or a group of employers.
The surcharge is a revenue mechanism that will provide additional funding for the mental health system. The Victorian Government has legislated that all revenue raised from the surcharge will be spent on mental health services.
Who pays the surcharge?
Base surcharge
You must pay the base surcharge if:
- you pay Victorian taxable wages, and
- your Australian wages exceed the first annual threshold of $10 million, equating to a monthly threshold of $833,333.
Additional surcharge
You must also pay the additional surcharge if:
- you pay Victorian taxable wages, and
- your Australian wages exceed the second annual threshold of $100 million, equating to a monthly threshold of $8,333,333.
For businesses that are a member of a payroll tax group, these thresholds apply at the group level on wages paid by all members of the group. The thresholds also count wages paid around Australia.
Existing exemptions for private schools, hospitals, charities, local councils and wages paid for parental and volunteer leave will also apply for the surcharge.
How much is the surcharge?
If your business is affected, you will need to pay:
- 0.5% for every $1 of Victorian taxable wages you pay, or payable, above the first annual threshold of $10 million – this is the base surcharge, and
- a further 0.5% for every $1 of Victorian taxable wages you pay, or payable, above the second annual threshold of $100 million – this is the additional surcharge.
The $10 million and $100 million thresholds are halved for the period 1 January to 30 June 2022 (the ‘transitional period’).
If you are a member of a payroll tax group, these thresholds apply at the group level and are claimed by the designated group employer only. The thresholds also count wages paid around Australia.
More detailed information can be found here.
To find out more about the Mental Health and Wellbeing Payroll Tax Surcharge and whether it applies to your business, contact your William Buck advisor to discuss your payroll tax obligations.
