This is general information and not advice. For more information go to the NSW Office of State Revenue.
[Budget 2023] The payroll tax rates remains at 5.45% of taxable wage. See NSW Budget Paper No. 1
[Budgets 2020-21 and 2021-22]
The NSW Budget announcements on 17 November 2020 included the following payroll tax measures. These measures remain in place following the 2021-22 budget announcements of 22 June 2021.
- payroll tax threshold $1.2 million from 1 July 2020 and future years
- payroll tax rate temporarily reduced to 4.85% (down from 5.45%) for 2 years commencing 1 July 2020
COVID-19 (Coronavirus) Relief Measures
- [1 March 2022] 50% liability reduction for 2021/22 payroll tax for grouped Australian wages of $10 million or less who experience a 30% decline in turnover
- [22 July 2021] NSW – Payroll tax reductions and deferrals to support businesses
The following measures have been announced by the state government in response to the impact of the Coronavirus:
- The due date for lodgement and payment of the 2021 annual reconciliation has been extended to 30 August 2021. See news release.
- Waiver of payroll tax for businesses with payrolls of up to $10 million (grouped Australian wages) for the months from April to June 2020. Those with payrolls over $10 million, will have the option of deferring the payment of payroll tax for up to six months.
- Waiver of fees and charges for small businesses, employment of additional cleaners of public infrastructure, and bringing forward maintenance of public assets and capital works.
- Land tax amelioration package for commercial landlords and tenants – see media release
News 22 Nov 2018 The NSW State Treasurer has announced a streamlining of payroll tax reporting and payment from 1 July 2019. The measures form part of the Government’s response to recommendations of the NSW Productivity Commission’s Review of Payroll Tax Administration.
The Review recommended a 3-tier compliance model based on a business’s quantum of annual payroll tax liability.
| Tier | Business annual payroll liability | Obligation | Reconciliation (previously 21 July) |
| One | up to $20,000 | annual payment, lodgement | Annual 28 July |
| Two | over $20,000 to $150,000 | monthly payment of a fixed amount, based on previous year’s payroll tax liability (with a 3% uplift) | Annual 28 July |
| Three | above $150,000 | monthly payment, based on monthly lodgements | Annual 28 July |
Update 21 June 2016: The NSW State Budget 2016-17 contains no changes to the basic payroll tax settings. However from 31 July 2016, the Jobs Action Plan payroll tax rebate will be increased from $5,000 to $6,000 (comprising $2,000 payable after 1 year and $4,000 after 2 years) and limited to businesses with 50 or less full-time equivalent staff .
Update 23 June 2015: The NSW State Budget 2015-16 contains no changes to the basic payroll tax settings.
- The Jobs Action Plan scheme which now provides a $5,000 payroll tax rebate to businesses that employ new workers has been extended to 30 June 2019.
- from 1 July 2015 a Small Business Employment Incentive Scheme is to provide a grant of up to $2,000 to businesses in New South Wales with wages below the current payroll tax threshold of $750,000 for hiring new employees.
Payroll Tax Rate in NSW
- From 1 July 2022 and currently the payroll tax rate reverts to 5.45% of taxable wages
- the payroll tax rate was temporarily reduced to 4.85% of taxable wages for the two years ending 30 June 2022
- from 1 July 2016 to 30 June 2020 the rate was 5.45% of taxable wages
Payroll Tax Threshold in NSW
- 2023-24 $1.2 million
- 2022-23 $1.2 million
- 2021-22 $1.2 million
- 2020-21 $1.2 million
- 2019-20 $900,000
- 2018-19 $850,000
- 2017-18 $750,000
- 2016-17 $750,000
The threshold amount is deducted from annual wages to determine the actual payroll tax liability for the year. This calculated liability is then compared to the total of monthly returns, resulting in either a balance to pay, or a refund due.
The annual deduction is reduced proportionately by any periods in which the employer does not have a NSW payroll.
Monthly thresholds
For monthly returns and the necessary monthly tax calculations, the annual deduction is converted to a monthly deduction by apportioning it to the actual number of days in the month.
Due dates
- Monthly payments are due 7 days from month end or the first following business day.
- An annual return and reconciliation is required by 28 July or the first following business day.
See further: Lodge your return
Definition of wages and exemptions
The payroll tax base include wages and salaries, the definition of which is expanded to include a range of contractor payments, allowances and fringe benefits as they are defined under the Fringe Benefits Tax Assessment Act 1986.
Included are payments to third parties for services provided by and employee (or director) to an employer.
There are also a number of exemptions and exclusions. Exemptions may be based on the status of the employer, or the nature of the work.
See further: What payments are liable for payroll tax (and what are not)?
Payroll tax and contractors
When are contractor payments not subject to payroll tax? Read the criteria.
Grouping provisions
Payroll values of grouped entities are added together for taxing purposes so that the deductible threshold is only available once within groups of related parties.
Relationships (and hence aggregation of payroll amounts) are determined on the basis of 5 possible factors:
- Related companies according to the Corporations Act definition
- Use of common employees
- Common control (more than 50%) from one or more director, shareholder, partner or beneficiaries of a trust
- Tracing of more than 50% direct or indirect interests in any corporation
- Subsuming – simultaneously a member of 2 or more groups, or members of a group with a controlling interest in another business
There are some group exemptions available.
See further: Grouping
NSW Payroll Tax Registration
Registration for payroll tax is required within seven days after the month in which your total Australian wages first exceed the current NSW monthly threshold.
The online registration information is here.
NSW payroll tax further info
- Schedule of OSR Payroll Tax Revenue Rulings
- [06 August 2021] NSW Payroll Tax: traps, tips & updates – Bartier Perry Lawyers
This page was last modified 2023-09-19