- Payroll tax is a state and territory tax on wages, separate from PAYG withholding and super; you register with your state revenue office once your wages pass that state's threshold.
- Thresholds and rates differ by state, from $1 million in Victoria and Western Australia up to $2.5 million in the Northern Territory (figures current as at July 2026).
- Related businesses are grouped and share a single threshold, and registering late can mean back-paid tax plus interest and penalty tax.
Payroll tax registration in Australia trips up more growing employers than almost any other tax, mostly because it isn’t federal. It’s a separate tax that each state and territory charges on the wages you pay, and you only become liable once your total wages cross that state’s threshold.
Go over without registering and you can be back-billed, with interest on top. Because the thresholds and rates differ everywhere, where you employ people changes when you start paying payroll tax.
What is payroll tax in Australia?
Payroll tax is a tax that state and territory governments charge on the total wages an employer pays. It’s self-assessed, so the onus is on you to check whether you’re over the threshold, register, and lodge returns. No one sends you a bill first.
Every state and territory runs its own scheme, so there are eight of them. The rules are broadly harmonised on what counts as wages and how grouping works, but each government sets its own threshold and rate.
“Wages” is broader than the salary line on a payslip. In most states it includes:
- salaries, wages, commissions, bonuses and allowances
- superannuation contributions
- directors’ fees
- the grossed-up value of fringe benefits
- many payments to contractors
- termination and some other payments
If you’re only just taking on employees, payroll tax probably isn’t in play yet. It tends to arrive later, once your combined wage bill grows past the threshold for the state you employ in.
Payroll tax vs PAYG withholding vs super: what’s the difference?
These three get muddled constantly, and they’re completely separate obligations. Payroll tax is a state tax you pay out of your own pocket on top of wages. PAYG withholding and super are amounts tied to each employee, not a state tax on your total payroll.
Here’s how they line up:
| Obligation | Who charges it | What it applies to | Who ultimately bears it |
|---|---|---|---|
| Payroll tax | State or territory revenue office | Your total wage bill above a threshold | The employer |
| PAYG withholding | ATO (federal) | Tax withheld from each employee’s pay | The employee |
| Superannuation guarantee | ATO and super funds (federal) | A percentage of each employee’s earnings | Paid by the employer into the employee’s fund |
The practical upshot: you can be paying PAYG withholding and super for years and still have no payroll tax to pay, simply because your total wages sit under the state threshold. Payroll tax only starts when that total is crossed.
Do you have to register? Payroll tax thresholds and rates by state
Whether you have to register comes down to one test: are your total Australian wages above the threshold for the state where you employ? If yes, you register and pay. If no, you generally don’t, though some states still want you registered once you cross a monthly figure.
The table below shows the annual tax-free threshold and the headline rate in each state and territory, current for the 2026-27 financial year (as at July 2026). Every figure is taken from the relevant revenue office.
| State / Territory | Annual threshold (2026-27) | Payroll tax rate | Revenue office |
|---|---|---|---|
| New South Wales | $1,200,000 | 5.45% | Revenue NSW |
| Victoria | $1,000,000 | 4.85% (1.2125% for regional employers) | State Revenue Office Victoria |
| Queensland | $1,300,000 | 4.75%, rising to 4.95% above $6.5 million | Queensland Revenue Office |
| South Australia | $1,500,000 | Variable up to 4.95% between $1.5m and $1.7m, then 4.95% | RevenueSA |
| Western Australia | $1,000,000 | 5.5% | RevenueWA |
| Tasmania | $1,250,000 | 4.0%, rising to 6.1% above $2 million | State Revenue Office (Tas) |
| Australian Capital Territory | $1,750,000 | 6.75%, rising from $20 million in national wages | ACT Revenue Office |
| Northern Territory | $2,500,000 | 5.5% (6.5% where Australia-wide wages reach $100 million) | Territory Revenue Office |
A few details that matter once you’re close to a threshold:
- The threshold is a full-year figure. If you employ for only part of the year, or pay wages in more than one state, your threshold is apportioned down, so you can owe tax on less than you’d expect.
- Western Australia and the Northern Territory taper the threshold. In WA the tax-free amount shrinks between $1 million and $7.5 million of wages and disappears above that. The NT reduces its deduction as wages climb past $2.5 million.
- Victoria phases out its deduction for wages between $3 million and $5 million, with no deduction above $5 million.
- Queensland adds a mental health levy on wages above $10 million, and the ACT applies higher rates once national wages pass $20 million, stepping up to 8.75% above $150 million.
For most small and growing businesses, the headline threshold and rate are what count. The tiers above only bite once you’re a large employer.
What are grouping rules, and when are related businesses combined?
Grouping is the rule that catches people out most. If your businesses are related, the revenue office adds their wages together and applies a single threshold to the group, not one threshold each.
Businesses are typically grouped when they share common owners or directors, when one controls another, or when employees are shared between them. So two companies you own, each paying $700,000 in wages, look under the $1.2 million NSW threshold on their own. Grouped, their combined $1.4 million is over it, and the group pays tax on the excess.
Only one member of a group can claim the threshold. The others declare their wages but get no separate tax-free amount, which is why grouping can turn two “safe” businesses into a payroll tax liability.
TIPIf you run more than one entity, work out your grouped wage bill before you assume you’re under the threshold. Grouping is assessed on the combined total, and it’s the single most common reason a business registers later than it should have.
How do you register for payroll tax?
Registering means applying with the revenue office in each state where you employ and are over the threshold. There’s no single national registration, so a business employing in both NSW and Victoria registers in both.
The steps are broadly the same everywhere:
- Work out your total Australian wages, including any grouped entities.
- Check them against the threshold for each state you employ in.
- Register through that state’s online portal, within the timeframe required by the relevant state revenue office, often shortly after you exceed the monthly threshold.
- Set up your lodgement frequency, which is normally monthly.
Because you register and report state by state, businesses that hire across borders often find managing payroll options across several jurisdictions is where the real admin sits, not in the single-state case.
How do you lodge and pay payroll tax?
Once registered, you lodge returns and pay on a set cycle. Most employers lodge monthly, calculating the tax on wages above the apportioned threshold and paying by the seventh day of the following month in most states.
After 30 June, you lodge an annual reconciliation. This trues up what you paid across the year against your actual full-year wages and threshold entitlement, so you either top up or get a refund. You lodge this reconciliation even in a year where the monthly figures netted to nil.
If your wages move around during the year, that’s fine: the monthly figure is provisional, and the annual reconciliation is where everything is squared away.
What happens if you don’t register?
Not registering doesn’t make the liability disappear. Because payroll tax is self-assessed, the revenue office can look back, assess the tax you should have paid, and add interest and penalty tax on top.
Penalties vary by state and by whether the office thinks the failure was honest or deliberate, but the pattern is consistent: back-paid tax for every year you were over the threshold, plus interest, plus a penalty component. Voluntarily coming forward almost always costs less than being found in an audit.
The safest move is to check your grouped wage bill against your state’s threshold each year as you grow, and register as soon as you cross it rather than waiting for a return to prompt you.
How Sleek helps you stay on top of payroll tax
Payroll tax sits in an awkward spot: it’s state-based, self-assessed, and easy to miss until you’re already behind. Sleek runs payroll and accounting and payroll compliance for growing Australian businesses, which means we track your wage bill against the right state threshold, register you when you cross it, and lodge your monthly and annual returns so nothing slips.
If you employ across more than one state, or run several related entities that might be grouped, having one team handle payroll and payroll tax together removes the guesswork.
Not sure whether you’ve crossed your state’s threshold yet?
Talk to a Sleek small business accountant and get your payroll tax position checked.
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Frequently Asked Questions
What is payroll tax and who pays it?
Payroll tax is a tax charged by each Australian state and territory on the wages an employer pays. The employer pays it, out of their own funds, once total Australian wages cross the relevant state threshold. It is not deducted from employees and is separate from income tax.
Is payroll tax the same as PAYG or super?
No. PAYG withholding and the superannuation guarantee are federal obligations tied to each employee and collected by the ATO. Payroll tax is a state tax on your total wage bill. You can pay PAYG and super for years without ever owing payroll tax, because payroll tax only starts once your wages exceed the state threshold.
What is the payroll tax threshold in my state?
It depends on where you employ, and the annual thresholds range widely. As at July 2026 they run from $1 million in Victoria and Western Australia, $1.2 million in NSW, $1.25 million in Tasmania, $1.3 million in Queensland, $1.5 million in South Australia, $1.75 million in the ACT, up to $2.5 million in the Northern Territory. Always confirm the current figure with your state revenue office.
When do I have to register for payroll tax?
You must register once your total Australian wages, including any grouped businesses, go over the threshold for a state where you employ. In most states you apply within the timeframe required by the relevant state revenue office, often shortly after you exceed the monthly threshold. Registering is separate in each state you employ in.
How do I register for payroll tax?
You register through the online portal of the revenue office in each relevant state, such as Revenue NSW, the State Revenue Office in Victoria, or the Queensland Revenue Office. You’ll need your ABN, wage figures, and details of any related entities. After registering, you set your lodgement frequency, which is usually monthly.
What happens if I don't register?
The liability doesn’t go away. The revenue office can assess the tax you should have paid for each year you were over the threshold and add interest and penalty tax. Penalties are generally lower if you come forward voluntarily than if the shortfall is found during an audit, so it pays to register as soon as you cross the threshold.
Can I be grouped with another business for payroll tax?
Yes. If businesses share common owners or directors, one controls another, or they share employees, their wages are combined and a single threshold applies to the whole group. Only one group member claims the threshold. Grouping is the most common reason a business unexpectedly becomes liable, so check your combined wage bill, not just each entity’s.
