Payroll tax is a state-based tax applied to wages paid by employers once their total payroll exceeds a set threshold. In Victoria, it applies to businesses with employees, including companies, trusts, and groups of related entities.
What is Payroll Tax?
Payroll tax is a tax imposed by the Victorian Government on employers based on the total wages they pay. It’s not deducted from employee salaries—instead, it’s an additional cost to the business. Wages include salaries, superannuation, bonuses, allowances, and certain contractor payments.
Who Needs to Register for Payroll Tax?
You must register for payroll tax in Victoria if:
- Your total Australian wages exceed the threshold (currently $1,000,000 per year)
- Your business is part of a group of related entities, and the combined wages exceeds the threshold of $1,000,000.
- You employ staff in Victoria, even if your business operates across multiple states, and you exceed the $1,000,000 threshold.
Grouping rules are particularly important—separate entities can be treated as one employer for payroll tax purposes.
When Should You Consider Payroll Tax?
Payroll tax often catches businesses off guard because it applies as your team grows. You should actively monitor payroll tax if:
- You’re approaching the $1,000,000 threshold
- You operate across multiple entities or business structures
- You engage contractors who may be deemed employees for payroll tax purposes
Early planning allows you to forecast the cost and avoid sudden cash flow pressure.
How Nobel Thomas Helps with Payroll Tax
At Nobel Thomas, we take a proactive approach to ensure you remain compliant while minimising payroll tax.
We assist with:
- Assessing whether your business needs to register
- Reviewing grouping rules across entities
- Advising on contractor vs employee classification for payroll tax purposes
- Setting up payroll systems aligned with reporting requirements
FAQs
- What is the payroll tax rate in Victoria?
Generally 4.85%, with a regional rate of 1.2125% for eligible employers. - Is payroll tax calculated on gross wages?
Yes—this includes superannuation, bonuses, and certain contractor payments. - Do I need to registerimmediatelyonce I hit the threshold?
Yes, registration is required when you exceed or expect to exceed the threshold. - Are contractors included in payroll tax?
Often yes—many contractor payments aredeemed wages unless exemptions apply. - How often do I lodge payroll tax?
Typically monthly, with an annual reconciliation at year-end.
Take the Next Step
Contact Nobel Thomas today to assess your payroll tax position, manage your obligations, and ensure you minimise payroll tax as you scale.
