TABLE OF CONTENTS
- What is the payroll tax threshold in NSW?
- What is the NSW payroll tax rate?
- What wages are taxable for payroll tax in NSW?
- When do you need to register for payroll tax in NSW?
- How does payroll tax work if you employ staff interstate?
- What exemptions and rebates apply to NSW payroll tax?
- Are contractor payments subject to NSW payroll tax?
- When are NSW payroll tax returns due?
Payroll tax in NSW is a state tax that employers pay on their total taxable wages. If your total Australian wages exceed the payroll tax threshold, you have to register and pay payroll tax to Revenue NSW.
Read on for everything you need to know about payroll tax NSW current rates, threshold amount, registration rules, exemptions, due dates, payroll tax obligations for New South Wales employers, and more!
What is the payroll tax threshold in NSW?
The annual threshold for NSW payroll tax is $1,200,000 for the 2025โ26 financial year. Remember, this is the tax-free threshold โ you onlyย pay payroll taxย on wages above this amount.
The monthly payroll tax threshold depends on the number of days in the month. Keep an eye on Revenue NSW as they publish a schedule of exact monthly amounts every year. Hereโs what it looks like for FY 2025โ26:
| Days in month | Monthly threshold |
|---|---|
| 28 days | $92,055 |
| 30 days | $98,630 |
| 31 days | $101,918 |
If your business is part of a group, only one designated group employer can claim the full threshold. Businesses grouped for payroll tax have to combine all the wages paid across the group.
What is the NSW payroll tax rate?
The payroll tax rate in NSW is 5.45% of taxable wages above the threshold. While the rate stayed the same for the 2025โ26 budget, youโll want to monitor the Revenue NSW thresholds page in case there are any future adjustments.
As an example, a NSW employer with $2,000,000 in taxable wages would pay 5.45% on $800,000 (the amount above the $1,200,000 threshold), which equals $43,600 in payroll tax for the year.
What wages are taxable for payroll tax in NSW?
Taxable wages include salaries, superannuation contributions, contractor payments, allowances, fringe benefits, and vehicle allowances. Any payments to non-working directors for services rendered are also included under payroll tax legislation.
Payroll tax is calculated on your total Australian wages, not just the wages paid in NSW. So if you employ staff in another state or territory, your total wages across the country will influence your threshold entitlement.
When do you need to register for payroll tax in NSW?
Youโll need to register for payroll tax with the revenue office within seven days after the month in which your total Australian wages first exceed the threshold.
Registration is essential even if you only go over the threshold for a brief period. Once youโre registered, you must lodge returns and pay payroll tax until you formally cancel your registration.
How does payroll tax work if you employ staff interstate?
If you pay wages in NSW and another state or territory, your NSW threshold entitlement is minimised. The calculation is based on the proportion of your total Australian wages that are wages paid in New South Wales.
In terms of other payroll tax administration rules, the same approach applies in South Australia, Western Australia and every other jurisdiction. Check out other revenue rulings for general information on how interstate wages are handled.
Letโs say your total Australian wages are $2 million and $1 million is paid in NSW. In this scenario, your NSW threshold is $1,200,000 ร ($1M รท $2M) = $600,000. So you would pay the payroll tax rate on NSW wages above $600,000.
What exemptions and rebates apply to NSW payroll tax?
There are several exemptions and concessions you should be aware of when it comes to NSW payroll tax, including things like:
- Trainee wages and apprentice wages โ eligible employers can claim a full or partial rebate.
- Wages paid by charities, religious institutions and public benevolent institutions.
- Wages paid to employees in regional NSW under regional employer rebates.
Itโs worth looking at the full list of payroll tax exemptions on the Revenue NSW website, as each exemption has its own rules and eligible criteria.
Are contractor payments subject to NSW payroll tax?
Yes, contractor payments are liable for payroll tax unless the contractor meets exemption criteria under payroll tax legislation. In most cases, all services provided by contractors are treated as wages for payroll tax purposes.
If a contractor provides services exclusively to your business, their payments will be taxable. Contractors who provide services to the public or who use their own equipment might be exempt, though.
Thatโs why you should always review your contractor arrangements to comply with the latest NSW obligations.
When are NSW payroll tax returns due?
You must lodge your monthly returns and make payments by the seventh business day of the following month. Most employers lodge monthly using the Revenue NSW online portal, as it makes everything streamlined.
If your annual payroll tax liability is under $20,000, you might be able to lodge annually instead. The annual return is due by 28 July every year and reconciles your actual taxable wages against the amounts reported during the financial year.
Be aware that failure to lodge or pay on time will result in penalties and interest. To make your life easier, use payroll software and STP tools to track your taxable wages and stay on top of due dates.
For more expert advice, speak to an accountant or tax advisor who understands NSW payroll tax rules.
