Payroll Tax Australia 2026: State Thresholds, Rates and When to Register

Payroll tax trips up growing Australian businesses every year — primarily because many owners do not realise it exists until they receive a state revenue office notice. Unlike PAYG withholding (which you know about from day one of employing staff), payroll tax only becomes relevant once your wages bill crosses a threshold. And by then, you may already owe backdated tax from the month you crossed the line. Here is what you need to know.

Payroll tax vs PAYG withholding: the critical difference

These two tax obligations are confused constantly — even by experienced business owners. Here is the precise difference:

2026 payroll tax thresholds and rates by state

Each state and territory sets its own threshold and rate. The threshold is based on your total Australian wages — not just the wages paid in that state. If you operate in multiple states and exceed any state's threshold, you must register in each state where wages are paid and calculate tax proportionally.

Rates and thresholds are indicative for 2025-26 and may change from 1 July 2026. Always verify current figures with the relevant state revenue authority before registering.

What counts as wages for payroll tax purposes?

The definition of taxable wages is broader than most business owners expect. Across all states, the following are generally included in the wages calculation:

• Salaries and wages paid to all employees (full-time, part-time, and casual)
• Superannuation contributions made by the employer (the Super Guarantee amount)
• Allowances (travel, tool, meal allowances where paid regularly)
• Fringe benefits — the grossed-up taxable value of fringe benefits
• Bonuses, commissions, and incentive payments
• Directors' fees
• Payments to some contractors and labour-hire workers (varies by state)
• Salary sacrifice amounts (varies by state and type)

Contractors and labour-hire workers are a particularly grey area. Most states apply payroll tax to contractor payments where the contractor is providing labour services to you personally — not a commercial result through a genuine business operation. If you engage contractors for longer than 90 days under a contract that looks like employment, those payments may be included in your wages for payroll tax purposes.

When does payroll tax apply to my business?

The threshold is based on annual wages. For most states, if your total wages bill for the financial year exceeds the threshold, you are required to register and pay payroll tax from the date you first exceeded the threshold — not from when you registered.

This catches many growing businesses by surprise. You hit $1.3 million in wages in Queensland in, say, October, but do not realise payroll tax applies until your accountant mentions it in June. You now owe payroll tax from October — including interest on late payments. This is why businesses approaching the threshold should register proactively rather than waiting.

As a rough guide: if you employ around 15-20 people on average wages, you will be approaching payroll tax thresholds in most states. A business with 15 employees earning $90,000 each has a total wages bill of $1.35 million — above the NSW and QLD thresholds and significantly above the VIC and WA thresholds.

How to register for payroll tax

Registration is handled separately by each state and territory revenue office. There is no federal registration — if you operate in three states and exceed each state's threshold, you register three times with three different authorities.

1. Calculate your total annual Australian wages (including super and fringe benefits) to determine if you exceed any state threshold
2. If you do, register online with each state revenue office where you pay wages — most now have online portals
3. Determine which states require monthly lodgements vs annual lodgements
4. Set up a system to calculate the proportion of wages in each state for multi-state reporting
5. Lodge your first return and make the first payment by the required due date

Most states offer amnesty programs for businesses that self-report a payroll tax obligation they have overlooked. If you suspect you should have registered previously, contact the relevant revenue office proactively — voluntary disclosure typically results in reduced penalties and interest compared to being caught through an audit.

Payroll tax and Payday Super from July 2026

From 1 July 2026, super must be paid on every payday under the new Payday Super rules. This affects payroll tax because employer super contributions are included in taxable wages for payroll tax purposes.

For most businesses already over the threshold, the super is already being included in wages — the only change is the timing and how you process the payments. But for businesses currently just under the threshold, the more frequent super payments (and the resulting increase in gross wages including super) may push their total wage figure over the threshold sooner than expected. If your wages are approaching a state threshold, factor in the 12% super guarantee when projecting whether and when you will cross it.

Frequently asked questions