Payroll tax is a tax for employers. It is based on the amount of monthly wages paid to permanent, temporary and casual employees and certain contractors.
The tax is paid monthly and the agency responsible, Revenue NSW, conducts regular audits to ensure employers meet their payroll tax obligations.
The payroll tax threshold determines at what point employers must pay the payroll tax. Each state and territory has its own payroll tax threshold.
If payroll tax is underpaid, penalties generally apply.
Who needs to register
You must register for payroll tax if your monthly wages bill during any month, exceeds the threshold amount.
In the financial year 2020/2021:
- the monthly threshold is set at $101,918 for a 31-day month
- the tax rate is set at 4.85%.
To work out your wages bill, include all forms of taxable wages.
If your estimated tax payable over a full financial year is:
- $20,000 or less, you can pay annually
- more than $20,000, you must pay monthly.
Note: If you start or stop employing within a financial year you’re not entitled to the full threshold. You’ll receive a proportion of the threshold equal to the number of days you employ to the number of days in a year.
Liable and exempt wages
Wages and other payments to employees engaged on a permanent, temporary or casual basis are subject to payroll tax. Payments made to certain contractors may also be deemed wages.
Wages – Revenue NSW
Some wages are exempt from payroll tax if they meet specific requirements.
Payroll tax wage exemptions – Revenue NSW
You can ensure you're meeting your payroll tax obligations with Revenue NSW's Payroll tax assist.
Registering for payroll tax
You can register for payroll tax online. Make sure you have all the necessary details ready as you cannot save and resume your registration once you have started.
You'll need :
- Australian Business Number (ABN)
- address, contact and bank details
- the date the business first employed staff
- all payments to employees for the current year, plus the 4 previous years (if applicable), including:
- salaries and wages
- fringe benefits
- employer superannuation contributions
- termination payments
- contractor payments
- apprentice and trainee wages
- bonuses and commissions
- director fees
- shares and options.
When you submit your registration, you'll receive an acknowledgement message with a lodgement reference number. You will need this number if you want to contact Revenue NSW.
Checklist of liable and exempt payroll tax items
An alphabetical guide to liable and exempt wages.
Common errors with payroll tax
You play an important role in meeting your own payroll tax obligations. Ensure you have all the information you need to avoid some of the common mistakes.
Payroll tax audits
Audits are regularly conducted – know how to prepare and what to expect.
Contact Revenue NSW
Call or email the department for NSW payroll tax support.