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How payroll tax works

Payroll tax is a state or territory tax calculated on the total wages you pay each month. It may also include payments you make to some contractors. The state or territory that your workers are in collects the tax.

Not all businesses pay payroll tax. You pay when your total Australian wages are over the tax-free threshold for the relevant state or territory. Thresholds and tax rates vary between states and territories.

Example of when to register for payroll tax

In the 2025–26 financial year, Victoria and South Australia have a monthly threshold of $83,333 and $125,000 respectively.

If you employ staff in Victoria and South Australia and your total Australia-wide wage bill for the month is:

  • $130,000 – you need to register for payroll tax in both states
  • $90,000 – you only need to register in Victoria

You don't pay if your total Australian wage bill is under the maximum threshold for your state or territory.

How to check if you need to register for payroll tax

You need to register for payroll tax if your total Australian wages are more than the threshold. Check the threshold for each state or territory where you have workers. You can find the threshold and payroll tax rate on the state or territory revenue office website:

There are several exemptions from payroll tax. Check with your revenue office to find out if your business qualifies for one.

If you’ve already registered and are closing your business, let the relevant revenue office know.