Australia Payroll Tax: State-by-State Comparison 2026

Payroll tax in Australia is a state and territory tax — not a federal tax — imposed on employers whose annual taxable wages exceed the relevant jurisdiction’s threshold. Each of the 6 states and 2 territories operates its own regime, with its own threshold, rate, and rules for grouping. For Australian companies operating across multiple jurisdictions, the result is a compliance matrix that requires careful attention. This deep-dive compares the 2026 payroll tax position across all 8 jurisdictions.

1. The Constitutional Background

Payroll tax is imposed under each state’s Payroll Tax Act, harmonised in many areas under the Payroll Tax Act 2007 (NSW), Payroll Tax Act 2007 (Vic), Payroll Tax Act 2008 (Tas), etc. Following the Pay-roll Tax (Indirect Taxes) Agreement 2007, most jurisdictions adopted broadly aligned definitions, but rates and thresholds remain jurisdiction-specific.

Primary sources:

• NSW: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax
• Vic: https://www.sro.vic.gov.au/payroll-tax
• Qld: https://www.qld.gov.au/jobs/business/taxes-payroll-tax
• WA: https://www.wa.gov.au/organisation/department-of-finance/payroll-tax

2. The State-by-State Matrix (2026)

Note: thresholds and rates change annually with state budgets. Verify current figures with each state revenue office before filing.

3. The Concept of “Wages”

Each jurisdiction’s Payroll Tax Act includes broadly aligned definitions of “wages” — caught:

• Salaries, wages, allowances
• Bonuses, commissions
• Superannuation contributions (employer)
• Fringe benefits (grossed up)
• Termination payments above tax-free threshold
• Contractor payments under “relevant contract” provisions
• Director fees

Excluded:

• Workers’ compensation payments
• Maternity, paternity, adoption pay (statutory)
• JobKeeper-style emergency payments (varies)
• Apprentice and trainee wages (limited exemption in some states)
• Charitable / non-profit organisations (subject to tests)

4. Multi-State Grouping Provisions

Payroll tax applies on a group basis. If multiple companies are “grouped” (common ownership, common directors, common control), wages are aggregated and a single threshold applies to the group.

Group rules (uniform across states):

• Common control test (>50% related body corporate, common shareholders 50%+)
• Common employees (employees performing services for two or more employers within a group)
• Tracing rules for indirect ownership

A group can choose which member is the Designated Group Employer (DGE) — typically the largest. The DGE claims the threshold; other members do not have a separate threshold.

5. Multi-Jurisdictional Apportionment

A company operating in multiple states apportions wages to each state based on the location where the employee performs services:

• Wages per state are calculated
• The tax-free threshold is also apportioned — each state gets a fraction equal to (its wages / total Australian wages)
• Each state’s tax is calculated on its share of wages above its share of the threshold

This means a company with $2M total wages, half in NSW and half in Vic, would have:

• NSW share: $1M wages, $600,000 threshold (50% of $1.2M)
• Vic share: $1M wages, $450,000 threshold (50% of $900K)
• Tax on $400,000 in NSW × 5.45% = $21,800
• Tax on $550,000 in Vic × 4.85% = $26,675
• Total: $48,475

6. Contractor “Relevant Contracts” Provisions

A persistent compliance pitfall: contractors paid as “self-employed” may still be deemed employees for payroll tax purposes under the relevant contracts provisions. The test:

• Is the contractor providing services that are labour-based?
• Is the contractor integrated into the company’s business?
• Is the contractor primarily working for this company?

Several exclusions apply:

• Contractor is providing services through their own business with multiple clients
• Contractor is providing only ancillary services
• Contractor’s payments are below stipulated thresholds

Failure to apply contractor inclusion rules is the leading source of payroll tax audit assessments.

7. Mental Health Levy (NSW, Vic, Qld)

Several jurisdictions have introduced mental health levies as additional payroll tax for large employers:

• NSW: +0.5% from $10M; +0.5% from $100M (cumulative — total uplift 1% above $100M)
• VIC: +0.5% from $10M; +0.5% from $100M
• QLD: +0.25% from $6.5M; +0.75% from $100M

These levies are computed on top of the standard payroll tax for high-wage employers.

8. Lodgement and Payment

Generally:

• Monthly lodgement and payment for large employers
• Annual reconciliation in July
• Annual lodgement only for employers below certain wage thresholds in some states

Each jurisdiction operates its own online portal:

• NSW: e-Revenue
• Vic: PTX Express
• Qld: OSR Online
• WA: RevenueOnline
• SA: RevenueSA Online
• Tas: TIPS
• ACT: Self-Service Portal
• NT: Integrated Revenue Application System

9. Exemptions and Rebates

General exemptions:

• Apprentice wages in some states
• Jobs for indigenous Australians rebates
• Regional employment rebates (Qld, Vic regional rate)
• Charitable organisations (income from non-commercial charitable activities)
• State and Federal departments (variations)

Targeted rebates:

• Innovation rebates (R&D-aligned)
• Apprentice and trainee rebates
• First job / youth employment rebates

10. Common Mistakes — Gyoseishoshi View

11. Audit Risk Areas

State revenue offices regularly audit:

• Employee/contractor classification (relevant contracts)
• Inclusion of all wage components (super, fringe benefits, bonuses)
• Grouping and ultimate beneficial ownership
• Inter-state apportionment accuracy
• Termination payment treatment

Audit penalties typically include the underpayment plus 25-90% additional penalty plus interest.

12. Strategic Implications for Companies

1. Run grouping analysis annually — group composition can change with M&A, restructure
2. Audit contractors quarterly — relevant contracts test is the most common assessment trigger
3. Apportion accurately — keep employee location records (state of work performance) for audit defence
4. Plan for mental health levies — large employers should budget for the cumulative uplift
5. Take advantage of regional rates in Vic and Qld where genuinely operating in regions

13. Comparison with Other Australian Employer Taxes

Payroll tax sits alongside:

• PAYG Withholding (federal, ATO) — income tax withheld on employee salaries
• Superannuation Guarantee (federal, 12% from 1 July 2025) — paid into employee super funds
• Workers’ Compensation (state-based) — insurance premium tied to wages
• Long Service Leave (state-based) — accrued obligation

Of these, only payroll tax is paid to the state revenue office; the others have separate frameworks.

Conclusion — A Federation-Driven Complexity

Australia’s payroll tax landscape reflects the federation: 8 jurisdictions, 8 thresholds, 8+ rate structures, common but not identical definitions. For multi-state employers, the compliance burden is real — but predictable, with annual budget cycles in May/June giving advance notice of changes.

A Gyoseishoshi cannot file Australian state revenue returns or operate Australian payroll. Scrib🐮 produces the corporate-side documentation: payroll tax registration boards, multi-state group designation memoranda, contractor classification frameworks, and audit-ready position papers.

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not Australian solicitors.

Sources

• NSW Revenue: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax
• Vic SRO: https://www.sro.vic.gov.au/payroll-tax
• Qld OSR: https://www.qld.gov.au/jobs/business/taxes-payroll-tax
• ATO (federal taxes for employers): https://www.ato.gov.au/business/payg-withholding/