The harmonisation of payroll tax between the Australian states is moving forward according to Deloitte Employment Taxes Partner, Frank Klasic, following the introduction of a new payroll tax Bill in Queensland this week.

“Changes to payroll tax legislation will largely be welcomed by the business community, who often operate across state borders, but there is also a downside of the harmonisation,” Mr Klasic said.

“The changes will lead to a significant increase in payroll tax liabilities for a number of employers, with some industries hit harder than others.

“Industries that engage a large number of contractors, such as the building industry, will be hit hardest.

“Although there are still some exemptions, payments to contractors will now be subject to payroll tax, where they have generally not been taxed in Queensland in the past.

“Superannuation and termination payments to non-employee directors will also be liable to payroll tax for the first time.”

Mr Klasic said specific provisions will be introduced to tax shares and options granted to employees.

“On the positive side, it will simplify the current payroll tax system and reduce compliance costs for businesses.”

If passed, the legislation will come into effect from 1 July 2008.

Despite the potential downside, Mr Klasic says that there will be a number benefits to employers of the harmonisation changes, including the linking of exempt motor vehicle and accommodation allowances to the rates set by the ATO, and the introduction of some new exemptions.