Tax

A state-by-state guide to payroll tax: How does your state stack up?

Matthew Elmas /

The end of the year is fast approaching, and with changes to payroll tax in multiple states in 2018, it’s probably a good idea to get up to date.

With that in mind, SmartCompany has canvassed the state of payroll tax across the country.

Victoria

The Victorian payroll tax rate is 4.85% for the year from 1 July 2018 to 30 June 2019.

However, regional businesses, only have to pay a 2.425% rate. A business is regional if it pays at least 85% of its payroll to regional employees.

Don’t be confused, the Liberals wanted to reduce payroll tax for regional businesses to 1%, but (spoiler alert) they lost the election and the rate remains at 2.425%.

The payroll tax threshold in Victoria is $650,000 (annual) after being increased by $25,000 in the last state budget.

That change brought the monthly threshold to $52,083, so businesses paying less in wages than this in a month aren’t required to pay payroll tax.

New South Wales (NSW)

In NSW the payroll tax rate is higher than Victoria, at 5.45% for the year from July 2018 to June 2019.

However, the threshold is also much higher at $850,000 (annual), having been increased from $750,000 last financial year.

That works out to  $69,863 for a 30-day month or $72,192 for a 31 day month.

Queensland

Queensland’s payroll tax rates haven’t changed in the last five years, which isn’t surprising because it remains pretty competitive.

Employers in the sunshine state pay a 4.75% payroll tax rate for the year from July 2018 to June 2019.

The threshold is much higher than both Victoria and NSW at $1.1 million (annually), which works out to $91,666 monthly.

Western Australia (WA)

Here’s where things get a bit more complex. Thanks to changes announced last year, WA has a progressive payroll tax system calculated on a tiered rate scale that increases from 5.5% to 6.5%.

For the year starting 1 July 2019 to 30 June 2019, businesses with less than $100 million in annual taxable wages (or more than $70,833 monthly) pay a 5.5% payroll tax rate.

Businesses with taxable wages over $100 million but below $1.5 billion pay a 6% rate, while those with over $1.5 billion pay a 6.5% rate.

This scale will apply until 30 June 2023.

South Australia (SA)

Until 30 December 2018 businesses with over $600,000 in annual taxable wages pay a 2.5% payroll tax rate.

Businesses with over $1 million in annual taxable wages but less than $1.5 million pay a variable rate between 2.5% to 4.95%.

For example, a business with $1.3 million in annual taxable wages must pay a 3.97% rate. Revenue SA has a calculator here.

Much of this is changing from 1 January 2019 though, thanks to measures introduced in the state’s budget this year.

The biggest change is that the threshold is increasing from $600,000 in annual taxable wages to $1.5 million.

Businesses above $1.5 million but below $1.7 million in annual taxable wages will pay a variable rate that moves from nil to $4.95%.

Northern Territory (NT)

Employers in the top end pay a payroll tax rate of 5.5%.

The threshold is $1.5 million in annual taxable wages or $125,000 monthly. Not much more to say here.

Tasmania

Currently for the 2018-19 financial year, businesses in Tasmania are required to pay a 4% payroll tax rate.

The threshold is $1.25 million in annual taxable wages, but businesses with over $2 million in annual taxable wages pay a higher 6.1% tax rate.

Monthly this works out to $164,384 for a 30 day month and $169,863 for 31 days.

Australian Capital Territory (ACT)

Businesses in the “Canberra bubble” pay the highest payroll tax rate in the country at 6.85%.

However, the ACT also has the highest threshold, starting at $2 million in annual taxable income, or $166,666 monthly.

So, in reality, most small businesses don’t pay any payroll tax in the ACT.

Which state do you think has the best regime? Let us know: [email protected]

NOW READ: SA budget delivers relief, but some SMEs will miss out

NOW READ: Pauline Hanson challenges Turnbull to axe tax: Aussie entrepreneurs weigh in

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Matthew Elmas

Matthew is the news editor at SmartCompany.

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