Payroll Tax Calculator

Understanding payroll tax in Australia

Payroll tax is a state and territory tax on wages paid by employers. Each jurisdiction sets its own rate and tax-free threshold. Employers whose total Australian taxable wages exceed the threshold must register and lodge payroll tax returns - typically monthly.

Taxable wages include salaries, bonuses, commissions, allowances, superannuation contributions, fringe benefits, and payments to certain contractors. If you operate across multiple states, you must register in each state where you have a nexus (employees working), and the threshold is apportioned based on the proportion of wages in each state.

Grouping provisions are particularly important: if your business is part of a group of related entities (common ownership or control), the threshold is shared across the group. Many businesses discover this during a state revenue office audit, resulting in back-payments and penalties.

How to use this payroll tax calculator

1. Select the state or territory where your employees are based.
2. Enter your total annual taxable wages for that jurisdiction, including salaries, super, allowances, and deemed contractor payments.
3. If you operate in multiple states, add each jurisdiction separately - the calculator adjusts the threshold proportionally.
4. Review your estimated monthly and annual payroll tax liability for each state.

State-by-state payroll tax rates and thresholds

Payroll tax rates and thresholds differ substantially across Australia. For FY2025-26, NSW charges 5.45% above a $1.2 million threshold, Victoria charges 4.85% above $900,000 (with a 10% mental health surcharge for wages above $10 million), Queensland applies 4.75% above $1.3 million, and Western Australia charges 5.5% above $1 million. Smaller jurisdictions such as Tasmania, SA, NT, and ACT each have their own structures, and some offer progressive phase-out rates rather than a flat threshold. These differences make multi-state compliance particularly challenging for businesses with distributed workforces.

How does AP automation help with payroll tax compliance?

Accurate payroll tax calculation depends on correctly classifying all payments as taxable wages - including contractor payments that may be deemed wages under the relevant state legislation. Automating your accounts payable process ensures contractor invoices are captured, coded, and flagged for payroll tax review before they slip through. For industrial businesses managing dozens of subcontractors across multiple states, this visibility is critical to avoiding unexpected audit assessments.