What is Payroll Tax?
Payroll tax is a state-based tax imposed on businesses when their total wages exceed a certain threshold. It’s calculated on wages paid to employees, including salaries, superannuation, allowances, bonuses, and some contractor payments.
Each state and territory in Australia administers its own payroll tax system, meaning:
- Thresholds and rates vary by state
- Registration is required in each state where you employ staff
- Businesses may be liable even if they’re based in one state but pay employees working in another
Table of Contents
- How Much is Payroll Tax?
- When is Payroll Tax Due?
- How to Calculate Payroll Tax
- Example (NSW)
- How Payroll Tax Is Handled in ClockOn
How Much is Payroll Tax?
Payroll tax rates and thresholds depend on your location. Here's a simplified summary (accurate as of July 2025):
| State | Threshold | Rate |
|---|---|---|
| NSW | $1.2 million annually | 5.45% |
| VIC | $900,000 annually (metro) | 4.85% metro / 1.2125% regional |
| QLD | $1.3 million annually | 4.75%–4.95% |
| SA | $1.5 million annually | 0%–4.95% (tiered) |
| WA | $1 million annually | 5.5% |
| TAS | $1.25 million annually | 4%–6.1% (tiered) |
| ACT | $2 million annually | 6.85% |
| NT | $1.5 million annually | 5.5% |
Tip: These rates are for general reference. Always check your state revenue office for the most up-to-date details.
When is Payroll Tax Due?
Most businesses lodge and pay payroll tax:
- Monthly (by the 7th of the following month), or
- Annually (due around July 21 each year, depending on your state)
Your due dates may vary based on your total wages and your state’s requirements.
How to Calculate Payroll Tax
Payroll tax is calculated using this formula:
(Total taxable wages - threshold) x applicable rate
Steps:
- Determine total wages: Include gross wages, super, allowances, bonuses, some contractor payments, etc.
- Apply any exemptions or thresholds based on your state
- Calculate the amount above the threshold
- Apply the payroll tax rate to that amount
Example (NSW):
- Total monthly wages: $150,000
- Monthly threshold: $100,000 (approx., based on $1.2M annual)
- Rate: 5.45%
Calculation:
($150,000 - $100,000) x 5.45% = $50,000 x 0.0545 = $2,725 payroll tax payable
How Payroll Tax Is Handled in ClockOn
ClockOn helps employers track, calculate and report on payroll tax liabilities through its built-in payroll reporting tools, but it does not automatically pay payroll tax on your behalf (since it’s a state-based obligation and handled outside the ATO system). Here’s how ClockOn supports payroll tax management:
1. Payroll Tax Report
ClockOn provides a dedicated Payroll Tax Report that:
- Breaks down gross wages, super, allowances and deductions
- Separates taxable and non-taxable wage components
- Can be filtered by date range and location (if you have staff in multiple states)
This report gives you all the figures needed to:
- Manually complete your monthly or annual payroll tax return via your state revenue office
- Confirm which wages are included or exempt from the calculation (e.g. parental leave, fringe benefits)
2. Accurate Classification of Pay Items
- ClockOn allows businesses to classify earnings correctly, so you know which items are subject to payroll tax.
- For example, bonuses, allowances, and superannuation are all included in the payroll tax base (ClockOn includes these in your reporting by default if they are taxable).
3. Multi-State Payroll Support
- If you have employees across different states, you can assign locations to employees, helping you break down taxable wages by jurisdiction in the Payroll Tax Report.
4. Exporting Data
- You can export the Payroll Tax Report to Excel or PDF to assist with reconciliation and submission to your relevant state or territory revenue office.
