In: Finance
what is the tax consequences for employer for paying his manager annual salary of $120000 payable monthly. Use the valid Australian law and answer the question.
Assuming the employer is based in Australia, they will be required to withhold tax from the employee's salary at the relevant marginal tax rate. The employer will also be required to pay payroll tax on the salary amount.
If the employee is paid a salary of $120000 per year, this equates to $10000 per month. The employer will be required to withhold tax from the employee's salary at the relevant marginal tax rate, which is currently 32.5% for incomes over $87000. This means that the employer will withhold $3250 in tax from the employee's salary each month.
The employer will also be required to pay payroll tax on the salary amount. Payroll tax is a tax levied on the total wages paid by an employer to their employees. In Australia, the payroll tax rate is currently 4.85%. This means that the employer will need to pay $485 in payroll tax each month.
This means that the employer will need to pay $485 in payroll tax each month.