Payroll Tax Essentials for Business Owners
11/5/25, 11:48 pm
TAAC
A practical guide to help employers understand and manage payroll tax across Australian jurisdictions.
What is Payroll Tax?
Payroll tax is a state and territory-based tax imposed on employers when their total Australian taxable wages exceed the threshold set by each jurisdiction. It applies to:
Salaries and wages
Superannuation contributions
Bonuses and commissions
Allowances
Employee share schemes
Certain contractor payments (if captured under “relevant contract” rules)
⚠️ Important: Payroll tax applies based on where the employee performs their work — not necessarily where the business is registered.
Common Triggers & Grouping Risks
Grouping of Entities
If your business is part of a group (e.g. same ownership or shared employees), the taxable wages of all group members are aggregated to assess if the group exceeds the threshold.
Contractors & Relevant Contracts
Some contractor payments may be deemed “wages” unless specific exemptions apply (e.g., services provided to the public, or work that’s genuinely independent).Ask The Ark for a Contractor Payroll Tax Assessment.
Employee Share Option Plans (ESOPs)
The value of shares/options granted under an ESOP is included in payroll tax calculations — either at the grant or vesting date, depending on the plan structure.
Employment Agencies & Labour Hire
If you are hiring through an agency or on-hire arrangements, both parties may be liable unless a chain-of-on-hire declaration is executed.
📍 State-by-State Payroll Tax Thresholds (FY2024–25)
Jurisdiction | Annual Threshold | Monthly Threshold (where applicable) |
NSW | $1,200,000 | $92,055 (28-day), $98,630 (30-day), $101,918 (31-day) |
VIC | $700,000 | $58,333 |
QLD | $1,300,000 | $108,333 |
SA | $1,500,000 | N/A |
WA | $1,000,000 | N/A |
TAS | $1,250,000 | N/A |
ACT | $2,000,000 | $166,666.66 |
NT | $1,500,000 | N/A |
Thresholds are applied proportionally across grouped entities and adjusted for part-year operations.
🌐 Multi-State Employees & The Nexus Test
When employees work across multiple jurisdictions in a month, payroll tax must be paid in one jurisdiction using the nexus hierarchy:
Where the employee performed most of their work;
If equal, then where the employee resides;
If unclear, then where the employer's ABN is registered or wages are paid from.
If wages exceed multiple state thresholds due to cross-border operations, pro-rata thresholds apply based on the share of wages paid in each state.
📅 Key Dates & Lodgment Frequency
Most states require:
Monthly lodgments if annual wages exceed the threshold
Annual reconciliation after 30 June each year
Jurisdiction | Monthly Due Date | Annual Reconciliation |
NSW | 7th of following month | 21 July |
VIC | 7th of following month | 21 July |
QLD | 7th of following month | 21 July |
SA, WA, TAS, ACT, NT | Varies – Check with The Ark | Late July |
How The Ark Can Help
✔ Threshold Risk Assessment for single and grouped entities
✔ Contractor Payroll Tax Review to reduce exposure
✔ Cross-Border Nexus Analysis for remote/hybrid teams
✔ ESOP Payroll Tax Advice aligned with ATO and state rules
✔ Payroll Tax Lodgment & Reconciliation Services