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Pay-roll tax was first imposed by the Commonwealth Government in 1941 to raise revenue for the payment of child endowment. Pay-roll tax is a tax paid by employers on their employees' remuneration. Charitable organisations are exempted from pay-roll tax.
In 1971 the right to impose pay-roll tax was transferred from the Commonwealth to the states and in Victoria the Payroll Tax Act 1971 (No.8154) established a system for administering the tax. Since that time pay-roll tax has been the State's most important source of tax revenue.