Payroll Tax 

At McCabe Weston Accountants we can assist with Payroll Tax.    

Payroll Tax is a state based tax payable by employers. Payroll Tax is based on what is called "Taxable Wages".  When an employers annual Taxable Wages exceeds the annual Payroll Tax Threshold the tax is payable.  

The annual Payroll Tax Threshold in Queensland is $1.1 million.  Employers are obligated to initiate registration for Payroll Tax.  Registration is required when Taxable Wages in any pay week exceeds $21,153.  The registration must be done within 7 days of the end of the month when weekly Taxable Wages first exceeds $21,153.  Payroll Tax year starts 1 July and ends 30 June.  At year end an Annual Payroll Tax Return will be prepared and lodged.  This return will determine the annual Payroll Tax liability of the employer for the year.  

In Queensland employers do not pay the full rate of Payroll Tax until their Annual Taxable Wages exceeds the upper threshold of $5.5 million.  Between the lower threshold of 1.1 million and the upper threshold of $5.5 million the rate of Payroll Tax will increase.  The top rate of 4.75% applies to employers whose Taxable Wages exceeds the upper threshold.  Related parties are grouped for Payroll Tax.  Payroll Tax is not avoided by establishing multiple fully owned entities (or related entities) each paying Taxable Wages below the threshold.  

Although Payroll Tax is a state based tax the rate of tax paid will be affected by the Australia wide (not just the state in which you are registered) Taxable Wages paid by the employer or group.  

Rules vary from state to state.  If you are employing in multiple states it is prudent to check the rules applicable to each state.

As a general guide, Taxable Wages includes the following:

  1. Gross Wages (apprentices and trainees are exempt)
  2. Superannuation Contributions (apprentices and trainees are exempt)
  3. Allowances
  4. Non-cash benefits 
  5. Directors Fees
  6. Contractors (providing labour)
  7. Salary Sacrificed Amounts

The above list does not cover all things included in Taxable Wages but highlights the main categories.  The are exemptions available within some of these categories if certain criterion are met. 

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