Mental Health & Wellbeing Levy
30/11/2021
The Mental Health and Wellbeing Levy will fund a complete rebuild of the mental health program in Victoria. This will be implemented as a payroll tax surcharge and come into effect from 1 January 2022.
What is the Mental Health and Wellbeing Levy?
The Mental Health and Wellbeing Levy was a recommendation of the Victorian Government’s State Mental Health Royal Commission which found the mental health system operates in crisis mode, fails patients and requires a complete rebuild.
In order to rebuild and implement a range of mental health services as recommended by the Royal Commission, a levy is required to fund this program.
All revenue collected by the levy will be required to be spent on the provision of mental health services.
When does it come into effect?
The levy will be implemented as a payroll tax surcharge and will come into effect from 1 January 2022.
Who is it applicable to?
Employers must pay the surcharge if they pay Victorian taxable wages and Australian wages exceed the first annual threshold of $10m, with a first monthly threshold of $833,333.
Employers must also pay an additional surcharge if they pay Victorian taxable wages and Australian wages exceed the second annual threshold of $100m, with a second monthly threshold of $8,333,333.
How much is the levy?
The surcharge will be levied at the following rates:
- 0.5% of the portion of Victorian taxable wages above $10m
- 1% of the portion of Victorian taxable wages above $100m
If employers are members of a group, these thresholds apply at the group level.
These annual thresholds will be adjusted proportionately if an employer does not employee for a full financial year.
In respect of the period from 1 January 2022 to 30 June 2022 (transitional period), the respective annual thresholds are $5m and $50m.
Employers which are currently exempt from payroll tax, such as private schools, hospitals, charities and local councils will not be required to pay the levy.
When is this levy to be reported and paid ?
The surcharge will be payable when the payroll tax payment is due.
For example, if an employer pays payroll tax monthly, the employer will also pay the surcharge monthly. If an employer pays payroll tax annually, the employer will pay the surcharge annually.
What employers need to do prior to 1 January 2022 to get ready?
The surcharge will be separately calculated from the monthly or annual payroll tax calculation, however, the surcharge will be included in the same monthly or annual return.
Employers will not need to register with the State Revenue Office and will not lodge separate returns.
How can SW help?
Our team can:
- Assist with the payroll function – SW can assist employers understand and become familiar with the new requirements to make this change as seamless as possible.
- SW can prepare/review monthly or annual payroll tax reconciliations to ensure taxable Australian wages have been calculated correctly including determining if exempt wages have been identified and correctly classified.
- SW can provide assistance and advice where employers employ in other Australian jurisdictions during the financial year. For example, annual thresholds are required to be adjusted by the ratio of the total Victorian taxable wages to total Australian wages.
Contributors
Janelle McPhee
Joshua Teo
