What is payroll tax?
Understand what payroll tax is, who administers it, and why it is different from PAYG withholding.
Summary
Payroll tax is a state or territory tax on wages paid by employers when taxable wages exceed the relevant jurisdiction’s threshold. It is not an ATO-administered federal tax, and rates, thresholds and some rules vary between states and territories.
What this means
Businesses may need to register for payroll tax in each state or territory where they have a liability. Payroll tax can apply to employee wages and, in some circumstances, payments to contractors. The relevant state or territory revenue office administers the tax.
Payroll tax is separate from federal obligations such as PAYG withholding, Single Touch Payroll and super guarantee, so an employer may need to manage both systems.
Typical actions
- Check your total Australian wages against the payroll tax threshold for each state or territory where you have workers.
- Check whether contractor payments or other remuneration are included under the relevant jurisdiction’s rules.
- Register and lodge with the relevant state or territory revenue office when required.
- Keep payroll records that support both federal and state or territory obligations.
- Review thresholds and rates regularly because they vary by jurisdiction and can change.
Official sources
Last checked: 24 August 2026
Payroll tax – business.gov.au
Australian Government overview of payroll tax and links to state and territory revenue offices.
Payroll Tax Australia
Provides national payroll tax information and links to each state and territory revenue office.
Payroll tax rates and thresholds
Provides current jurisdiction-specific rates, thresholds and official revenue-office links.
Related questions
- What is PAYG withholding for employees?
- What tax obligations do employers have?
- What is Single Touch Payroll?
- What records do employers need to keep?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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