Frequently asked questions - regional
What do I include in wages that qualify as regional?
Taxable Victorian wages are the total wages taxable under Victorian legislation before subtracting the allowable deduction.
If an employer meets the regional eligibility criteria, all their taxable Victorian wages are considered regional and attract the regional rate of payroll tax.
If an employer does not meet the regional eligibility criteria, then all their taxable Victorian wages are considered non-regional and attract the usual rate of payroll tax.
Can I still claim the regional rate if I have changed my employment status during the financial year?
You can claim the regional tax rate if your ABN registered business address is in regional Victoria or, if it does not have an ABN, your business has its principal place of business located in regional Victoria, and you pay at least 85 per cent of your Victorian taxable wages to regional employees in a full financial year.
For example: ABC Pty Ltd was a non-group employer for six months but became an ordinary member of a group for the remainder of the financial year. The 85 per cent test is taken on the Victorian wages for a full financial year. The wages for the non-group period and the ordinary member period will be combined to work out if the entity has met the 85 per cent test.
What if I have changed the ABN registered business address during a financial year?
In order to be eligible for the regional tax rate, an employer must meet both criteria, that is:
- Be based in regional Victoria, and
- Pay at least 85 per cent of its taxable Victorian wages to regional employees during a financial year.
Once you meet both these criteria, wages from then on are considered regional.
For example, if an ABN registered business address was previously in a non-regional area of Victoria but changes to a regional address in January, wages from 1 January are considered regional as long as they also meet the 85 per cent rule.
How is a non-scheduled group liability calculated?
The liability is calculated using the following formula:
- Designator group employer (DGE) taxable wages minus the deduction = net DGE taxable wages,
- Net DGE taxable wages x applicable tax rate + (total ordinary members wages – regional employers x 2.425%) + (total ordinary members wages – non-regional employers) = group taxable liability.
How is a scheduled group liability calculated?
The liability is calculated using the following formula:
- ((group Victorian taxable wages – deduction) x (total regional employer wages/group Victorian taxable wages) x 2.425%) + ((group Victorian taxable wages – deduction) x (total non-regional employer wages/group Victorian taxable wages)) x 4.85%) = group taxable liability
How is liability calculated for a scheduled group with non-scheduled members?
The liability is calculated using the following formula:
- ((total scheduled group Victorian taxable wages – deduction) x (total scheduled regional employer wages/total scheduled group Victorian taxable wages) x 2.425%) + ((total scheduled group Victorian taxable wages – deduction) x (total scheduled non-regional employer wages/total scheduled group Victorian taxable wages) x 4.85%) + (total non-scheduled regional employers’ taxable wages x 2.425%) + (total non-scheduled, non-regional taxable wages x 4.85%) = group taxable liability
If the scheduled group does not use the full deduction, it will be allocated against the highest non-scheduled, non-regional employer’s taxable wages.
