Does your business pay wages to hired employees? If so, you may be obligated to pay payroll tax. Understanding this levy is vital if you want to operate legally. In this guide, we explain what payroll tax is and outline the variations in rates between different states. We also highlight why payroll tax is important for your business.
What is Payroll Tax in Australia?
Payroll tax is a levy that employers must pay if their business’s total wage bill exceeds a certain threshold. Payroll tax was introduced temporarily during World War II but was made permanent in 1947. Then, in the 1970s, each state gained control over its own payroll tax rates and thresholds.
Why Do Payroll Tax Rates Matter?
Payroll tax awareness matters if you want to optimise your business operations. Keeping informed of payroll tax rates and thresholds will help you budget more accurately and make more productive business decisions.
If you fail to report the correct payroll tax figures for a financial year, you risk attracting the attention of the Australian Tax Authority (ATO). You must improve your payroll governance to ensure you pay the right tax and remain a fully legitimate business.
Payroll Tax Rates & Thresholds
These are the current rates and annual thresholds of payroll tax for each state (as of 2024):
| State | Rate | Annual Threshold |
| Australian Capital Territory | 6.85% | $2,000,000 |
| New South Wales | 5.45% | $1,200,000 |
| Northern Territory | 5.5% | $1,500,000 |
| Queensland | 4.75% (< $6,500,000)
4.95% ($6,500,000+) |
$1,300,000 |
| South Australia | 4.95% ($1,700,000+) | $1,500,000 |
| Tasmania | 4% ($1,250,001 – $2,000,000)
6.1% ($2,000,001+) |
$1,250,000 |
| Victoria | 4.85%
1.2125% (regional employers) |
$900,000 |
| Western Australia | 5.5% | $1,000,000 |
Payroll Tax Exemptions
Not all businesses need to pay payroll tax. Your company will be exempt from paying if your total wage bill falls below the threshold figures. Make sure you’re up-to-date with the weekly, monthly, and annual thresholds for payroll tax in your state.
Calculate Accurate Payroll Tax with Glance Consultants
Payroll tax awareness will help your business operate legally and fairly. But it can be challenging to figure out how much you need to pay, particularly since rates and thresholds vary between states. This issue is made even worse if your business operates in multiple states.
You should hire a specialist tax consultant to ensure your company operates inside the law. At Glance Consultants, we can remove the burdens of understanding payroll tax and help you navigate the complexities of calculating rates and exemptions. Get in touch today to optimise your business accounting.
