Payroll tax is a tax based on the total wages of businesses in each state and territory. It applies when total wages exceed a specific threshold. Unlike income tax, which the federal government manages, payroll tax is regulated at the state or territory level. This means the rules, thresholds, and rates vary depending on your business’s location.
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What Is Payroll Tax?
Payroll tax is charged on the wages that employers pay when their total wage bill exceeds their state or territory’s threshold. “Wages” can include salaries, superannuation, commissions, bonuses, and fringe benefits. If your business operates in multiple states, you may need to register and pay payroll tax in each state, based on where your employees are located and how you’ve allocated their wages.
Who Needs to Pay Payroll Tax?
Businesses that:
– Have an Australian Business Number (ABN)
– Employ staff (this includes part-time, full-time, and sometimes contractors)
– Pay wages that exceed the state or territory’s tax-free threshold
Each state has its own thresholds and rates. For example:
- NSW: Threshold of $1.2 million; tax rate 5.45%
- Victoria: Threshold of $700,000; tax rate 4.85%
- Queensland: Threshold of $1.3 million; tax rate 4.75%
- South Australia: Threshold of $1.5 million; variable rates apply
(Thresholds and rates may change yearly; always check the latest figures.)
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Key Differences by State and Territory
Each state and territory has its own unique payroll tax system with different thresholds and tax rates. This means a business operating in multiple states may have different obligations in each area.
- Thresholds: The annual tax-free threshold, which is the amount of wages you can pay before being liable for payroll tax, varies. For example, the threshold in New South Wales is different from that in Queensland or Victoria.
- Rates: The percentage of tax you pay on wages above the threshold also differs. Some areas have a single rate, while others use a tiered system where the rate increases with your total wage bill.
- Interstate Wages: If your business has employees in multiple states, a complex set of rules called “nexus provisions” decides where payroll tax is payable. Your threshold will be divided based on the portion of your total Australian wages paid in that specific state.
Key Payroll Tax Obligations
- Registration: If your wage bill exceeds the threshold, you must register for payroll tax in that state or territory.
- Lodgement: Most areas require monthly lodgements and an annual reconciliation.
- Payments: You need to pay your payroll tax by the due date to avoid interest and penalties.
How Refund MyTax Now Can Help
Navigating payroll tax can be complicated, especially if you operate in multiple states or territories. At Refund MyTax Now, we:
- Help determine if your business is liable
- Assist with registration and compliance
- Prepare and file payroll tax returns
- Ensure you meet your obligations and avoid penalties
Stay Compliant and Stress-Free!
Mistakes with payroll tax can cost you time and money. Let our experts manage it so you can focus on growing your business.
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No matter where you are in Australia—working with Refund MyTax Now (A Certified Practising Accountant (CPA) or Registered Tax Agent) can help simplify your tax obligations and boost your financial outcomes. We encourage you to register online and connect with one of our expert accountants for a detailed, one-on-one discussion. Our priority is to ensure you claim every eligible deduction and receive the maximum refund possible.
If you’re looking to begin your Online Income Tax Return, or need information about the 2025 tax return, myTax 2025, or myGov 2025, feel free to reach out.
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