Payroll tax is a State and Territory tax on wages that employers pay employees. The tax is calculated based on the amount of wages you pay employees Australia-wide per month (not averaged per annum). Make sure you stay up to date with payroll tax changes set to occur from July 2021.
All Australian States and Territories have harmonised their payroll tax administration in a number of key areas. Other areas, such as the tax rates and thresholds, vary between States and Territories.
If you are a member of a group of employers, the threshold is calculated on the group members’ combined annual Total Australian taxable wages (you don’t compare State wages to State threshold!). If your total Australian Taxable wages are getting close to any of the relevant thresholds please contact us to make sure you aren’t liable or that you are registered in each relevant state.
A group exists if:
- corporations are related bodies corporate
- employees are used in more than one business
- the same person, or set of persons, has a controlling interest in 2 or more businesses
- an entity has a tracing interest in corporations
- a person is part of 2 or more groups.
Your business only needs to fit into one of these categories to be grouped.
Key Payroll Tax Details for ACT, NSW, QLD and VIC
ACT Payroll Tax
At the time of writing, there has been no announcement of any changes to the ACT Payroll tax rate or threshold so it continues as 6.85% on payrolls over $2Mpa.
NSW Payroll Tax
The NSW Payroll Tax threshold for the 2021 year was increased to $1,200,000 and was backdated to 1 July 2020. It is unchanged for 2021/22. The rate of NSW payroll tax has also reduced to 4.85% for the 2021 and 2022 financial years.
QLD Payroll Tax
The current threshold for 2020/21 is $1.3M but they have different rates of payroll tax:
- 4.75% for employers or groups who pay $6.5M or less in Australian Taxable Wages;
- 4.95% for employers of groups who pay more than $6.5M in Australian Taxable Wages;
- there is a 1% discount for regional employers until 30 June 2023.
VIC Payroll Tax
The current tax fee annual threshold for 2020/21 is $650,000pa with a rate of 4.85% for non-regional employers. Regional Victorian employers pay 2.02% for 2020-21; 1.62% for 2021-22 and 1.2125% for 2022-23.
Please note that monthly returns are due by the 7th day after month end (except 14 Jan for December returns) and the Annual Reconciliations (including June) need to be lodged by 21 July each year.