1. Home
  2. »
  3. Businesses
  4. »
  5. Payroll Tax Australia
  6. »
  7. Payroll Tax Victoria

Payroll Tax Victoria

Payroll Tax in Victoria is managed by the State Revenue Office.

Victoria State Budget News 22 May 2023

  • The payroll tax exemption threshold will increase from $700,000 to $900,000 with effect from 1 July 2024. From 1 July 2025, the payroll tax exemption threshold will be raised to $1 million.
  • From 1 July 2024, the tax-free amount will reduce for each dollar of wages a business pays over $3 million. Businesses with wages over $5 million will no longer benefit from the tax-free threshold.

  • From 1 July 2024 to 30 June 2033 large businesses (defined as national payroll of $10 million or more) will pay a further 0.5% payroll tax and $100 million or more will pay an additional 0.5%. The surcharges apply to the Victorian payroll share above the threshold.
  • From July 2024 high-fee non-government schools will no longer be exempt from payroll tax

See https://www.budget.vic.gov.au/budget-papers

Payroll Tax Rate in Victoria

The general payroll tax rate in Victoria is currently (since 1 July 2014) is 4.85%, eligible regional employers 2.425%  progressively reducing to 1.2125% by 2022-23.

Regional employers: From 1 July 2017 a payroll tax rate of 3.65% (2.425% from 1 July 2018) is for businesses with a payroll of 85% regional employees. This further reduces to 1.2125% per cent, phased in over 3 years from 1 July 2020.

For the 2013-14 financial year (and earlier years since 1 July 2010) the rate was 4.9% of taxable wages

Historical payroll tax rates and thresholds are listed here.

Payroll Tax Threshold in Victoria

From 1 July 2024, the threshold will be raised to $900,000, and from 1 July 2025 the threshold will be raised again to $1,000,000.

From 1 July 2022 2021 the tax threshold is $700,000. 

A May 2022 Budget measure brought forward the threshold increase to $700,000 from 1 July 2022 to 1 July 2021.

From 1 July 2021 the threshold is $675,000. 

From 1 July 2018 the threshold is $650,000. For monthly returns and the necessary monthly tax calculations, the annual deduction is converted to a monthly deduction of $54,166.

From 1 July 2017 the annual threshold is $625,000. For monthly returns and the necessary monthly tax calculations, the annual deduction is converted to a monthly deduction of $52,083.

The 2016-17 payroll tax annual threshold (from 1 July 2016) was $575,000. For monthly returns and the necessary monthly tax calculations, the annual deduction is converted to a monthly deduction of $47,916.

Earlier thresholds and rates are here.

In an annual reconciliation, 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.

COVID-19 (Coronavirus) Relief Measures

Measures include:

  • tax waived for payrolls up to $3 million in 2019-20
  • additional Jobkeeper program payments exempted
  • deferral of 2020-21 tax to 2021-22 for payrolls up to $10 million (based on 2019-20 returns)
  • for payrolls up to $10 million a New Jobs credit of 10% of Victorian taxable wages in 2020-21 and 2021-22.

See in detail Coronavirus payroll tax relief

Victorian Payroll Tax Due Dates

  • Monthly returns and payment are due seven days after the end of each month except June, or if a weekend or public holiday, the next business day.
  • An annual return and reconciliation is required by 21 July each year

Payroll Tax Victoria Definition of Wages

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 third party payments.

In detail see Payroll tax checklist of taxable or exempt items

Victoria Payroll Tax Exemptions

There are a number of exemptions and exclusions from payroll tax in Victoria.

Exemptions may be based on the status of the employer, or the nature of the wages.

Exempt organisations include Not For Profits, Public Benefit Institutions, Religious organisations and government schools.

In detail see

Victoria Payroll Tax and Contractors

The definition of wages for payroll tax purposes includes payments contractors who provide predominantly labour, and who mainly work for one person.

The contractor provisions can apply whether or not the services are provided through another entity such as a company or trust, and deemed wage amounts exclude any GST component.

The Payroll Tax Act 2007 specifically exempts payments made for services provided by:

  • Owner-drivers;
  • Insurance agents; and
  • Door-to-door sellers.

Other exemptions apply, including for certain short term arrangements, sub-contracted performance, contracts primarily for the supply of materials, or where services are provided to a range of clients or to the public generally.

Contractor payments is a complex area, and there are anti-avoidance provisions.

In detail see: Contractors

Victoria Payroll Tax and Employment Agencies

An employment agency arrangement typically involves:

  • the service provider contracting with the employment agent, and
  • the employment agent contracting with the client.

The Payroll Tax Act 2007 provides that an ’employment agency contract’ is not a ‘relevant contract’, and therefore payments are not exempt under the contractor provisions. Consequently a payroll tax liability remains with the agency.

See in detail: Employment agencies

Victoria Payroll Tax 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 :

  • Related companies according to the Corporations Act definition
  • Use of common employees
  • Common control by one or more persons
  • Tracing of aggregate controlling interests

See in detail: Grouping

Victorian Payroll Tax Registration

Electronic registration and payment of payroll tax is required by the 7th day of the month following the month in which wages exceed the deduction threshold level.

Each member of the group must be registered with the SRO both individually and as part of the group, whether or not an employer, and group changes notified online.

See: Registration

Further information

This is general information and not advice. For more complete information go to the Victorian State Revenue Office.

This page was last modified 2023-05-24