Managing risk

Payroll tax rates and thresholds in different states

As an employer in Australia, you may have a payroll tax obligation. Although the principle of payroll tax seems straightforward, tax legislation in Australia can be confusing to navigate. This is because payroll tax is a state and territory tax. This means different states and territories have its own rates and thresholds.

Payroll tax rates and thresholds are calculated based on the total taxable wages an employer pays to employees. Employers only need to pay payroll tax if their taxable wages (or their group’s taxable wages) exceeds the state or territory threshold.

Learn about the different payroll tax rates and thresholds in each state in this post.

What is payroll tax?

Payroll tax is calculated based on the amount of wages an employer pays every month. These wages include employee salaries, payments to contractors and the remuneration for directors and management. Superannuation, allowances, fringe benefits, bonuses, commissions and employee termination payments are also included.

Every state or territory in Australia has payroll tax legislation and the tax is payable directly to the state or territory revenue office. However, the rates and thresholds vary between states, as does the registration process.

New South Wales has a payroll tax rate of 5.45%. The payroll tax threshold for the 2019-2020 tax year is $900,000. This will increase to $950,000 for the 2020-2021 tax year. By the 2021-22 tax year, the threshold will be $1 million.

In New South Wales, payroll tax is lodged on the Revenue NSW website.

In Victoria, the payroll tax rate is 4.85%. However, regional employers who pay at least 85% of payroll to regional employees have a lower payroll tax rate of 2.425%. The payroll tax threshold in Victoria is $650,000 for the tax year from 1 July 2019 to 30 June 2020.

Payroll tax in Victoria is lodged on the State Revenue Office website.

The payroll tax rate in Queensland is 4.75% for the 2019-2020 tax year. This tax rate applies for any employer or group who pays over the threshold of $1.3 million in wages. If an employer or group pays over $6.5 million in Australian taxable wages, the tax rate is 4.95%.

Regional employers in Queensland are also entitled to a 1% discount on payroll tax. Regional employers are those who are primarily based in regional Queensland, and pay 85% of taxable wages to regional employees. Employers can lodge their payroll taxes on the Business Queensland website.

The tax rate in South Australia is variable, depending on the total wages paid for the full financial year. If an employer’s total wages fall between $1.5 million and $1.7 million, the rate varies between 0% and 4.95%. If an employer exceeds the $1.7 million threshold, the rate is 4.95%.

A payroll tax calculator can be found on the RevenueSA website. Employers also lodge payroll tax on RevenueSA online.

Western Australia employs a tiered payroll tax rate scale, based on the total taxable wages paid. Employers must begin paying payroll tax if they exceed the minimum threshold of $850,000.

For employers who pay between $850,000 and $100 million in taxable wages, the tax rate is 5.5%. Those who pay between $100 million and $1.5 billion pay the Tier 4 rate. If an employer pays over $1.5 billion, they pay the Tier 5 rate. Tier 4 and Tier 5 rates can be calculated on WA.gov.au. Payroll tax can also be paid directly on the Western Australia government website.

The payroll tax rate in the Northern Territory is 5.50%. This applies if an employer or group exceeds the payroll tax threshold of $1.5 million in taxable wages. Employers lodge payroll taxes on the Northern Territory Integrated Revenue Application website.

Tasmanian employers must pay a payroll tax rate of 4% if they exceed the $1.25 million threshold. For employers whose taxable wages exceed $2 million, the tax rate is 6.1%. Payroll tax is lodged on the Tasmanian Revenue Online website.

The payroll tax rate for employers in the Australian Capital Territory is 6.85%, which is the highest in the country. This tax rate applies for any employer who pays over $2 million in total taxable wages.

Payroll tax is lodged on the Australian Capital Territory’s Revenue Office’s Self Service Portal. Those without access to the portal can lodge returns using the Online Payroll Tax Return Form.

Payroll tax due dates

Payroll tax is due within seven days after the close of the month. If the seventh day is a weekend or public holiday, payroll tax is due on the next business day.

Annual reconciliation dates vary in each state:

  • New South Wales: 28 July

  • Victoria: 21 July

  • Queensland: 21 July

  • South Australia: 22 July

  • Western Australia: 21 July

  • Northern Territory: 21 July

  • Tasmania: 21 July

  • Australian Capital Territory: 21 July

Employers in Australia must comply with legislation surrounding payroll rates and thresholds. Not doing so could result in a penalty or fine.

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