Payroll tax is a state and territory tax on employers based on the wages they pay, with varying rates and thresholds by jurisdiction.
Legislation: State/Territory Payroll Tax Acts | Category: Taxation
What is Payroll Tax?
Payroll tax is a state and territory tax imposed on employers based on the wages they pay to employees. Each jurisdiction has its own payroll tax legislation with different rates, thresholds, and exemptions. Employers whose total Australian wages exceed the threshold in a state or territory must register for payroll tax in that jurisdiction.
Payroll tax applies to wages broadly defined, including salaries, superannuation contributions, certain contractor payments, fringe benefits, and termination payments. Grouping provisions may aggregate wages of related entities. Employers operating across multiple states may have obligations in each jurisdiction where they pay wages.
Key Compliance Points for Employers
- Thresholds and rates differ by state — check the rules for each jurisdiction where wages are paid
- Contractor payments may be subject to payroll tax depending on the nature of the arrangement
- Related entities may be grouped, with a single threshold shared across the group
- Monthly returns are typically required, with an annual reconciliation
- Revenue offices conduct audits focusing on contractor arrangements, employee benefits, and grouping
Frequently Asked Questions
What is Payroll Tax?
Payroll tax is a state and territory tax on employers based on the wages they pay, with varying rates and thresholds by jurisdiction.
Why is Payroll Tax important for employers?
Understanding payroll tax helps employers comply with Australian employment law, avoid penalties, and maintain fair workplace practices.
