Frequently asked questions: payroll tax

What is payroll tax?

Payroll tax is a general purpose tax that is imposed on wages paid by employers. It is state tax and applies in all Australian states and territories.

Payroll tax is collected and administered in the NT in accordance with the Payroll Tax Act. It is a self-assessed tax that employers are required to pay by way of monthly return. Tax is paid into a consolidated holding account and is used to meet the costs of essential public services such as education, health, public safety and law and order.

What are Northern Territory wages?

The rules for determining when wages are liable to payroll tax in the Northern Territory (NT) are generally based on where the services are performed by an employee in a relevant month. These are described in detail in Revenue Circular RC-PRT-004 PDF (194.4 KB).

What do I include as wages?

For detailed information on what wages are subject to or exempt from payroll tax, refer to the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

What is the rate of payroll tax and threshold?

View the current and historical thresholds and rates for payroll tax.

When is tax payable?

Tax is payable by the 21st of the month following the return period it relates to. For example, an employer on monthly frequency must pay their tax for July 2016 by 21 August 2016.

When must I register for payroll tax?

From 1 July 2011, an employer must register for payroll tax in the Northern Territory (NT) if their or they are a member of a group, the group's total Australian taxable wages exceed the exemption level of $125,000 per month ($1,500,000 per annum). If their or the group's total Australian taxable wages exceed either of these amounts, they will only be liable for payroll tax in the NT on the NT proportion of their taxable wages. For more information on how to calculate the tax, refer to the Calculation of Payroll Tax​ section of the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

How does 'Grouping' affect my payroll tax liability?

Under the payroll tax scheme, certain businesses that are related or associated entities, are grouped for the purpose of paying payroll tax. Where businesses are grouped, the combined wages of the members are used to determine if a liability to register exists and the amount of any allowable deduction.

For further information on 'grouping of businesses', refer to the chapter headed Grouping Businesses in the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

If I am liable, what must I do?

You must register for payroll tax in the month following the month that your wages first exceed the monthly exemption threshold. You can register through the TRO’s online registration and lodgement facility, INTRA.

Once the registration has been approved by the TRO, all registered users will be notified by email and can assess INTRA to lodge returns and monitor payments.

Generally, returns are required to be lodged on a monthly basis. However, if your estimated liability does not exceed $10,000 a year, TRO may approve the lodgement of an annual return.

Are Employment Termination Payments liable to payroll tax?

Certain components of termination payments are subject to payroll tax. For more information, refer to Employment Termination Payments in the chapter headed Definition of Wages in the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

Are payments to contractors liable?

From 1 July 2009, the TRO adopted the harmonised ‘relevant contractor’ model which provides clear exclusions for some contractors from payroll tax. Prior to this date, employers were required to assess each contractor against the common law definition of an ‘employee’.

For further information on contractor payments and determining whether payments made to a particular worker are taxable, refer to the section headed Contractor Payments in the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

Are payments for unused leave and sick leave liable to tax?

Payments made to employees for any unused rostered days off or unused leave (for example, sick or annual) are subject to payroll tax. For more information refer to 'Wages and salaries' in the chapter headed Definition of wages​ in the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB).

What information brochures do you have?

Territory Revenue Office (TRO) has published the Employers Guide to Payroll Tax in the Northern Territory DOCX (368.9 KB) to provide employers and their advisers with a summary of the Northern Territory payroll tax scheme, information on wages, grouping provisions, fringe benefits, superannuation and how to calculate payroll tax liabilities.

TRO also has a number of publications and forms to assist you in understanding payroll tax and your obligations. This information is available on our web site or by telephoning 1300 305 353.

What is the Hiring Resident Employee Exemption?

The exemption was announced as part of Budget 2018-19 to encourage the employment of Territory residents. From 1 May 2018, as an employer, you may be eligible for a payroll tax exemption for up to two years in relation to wages paid.

Government announced on 17 March 2020 that the hiring resident employee exemptions have been extended to new hires up to 30 June 2021. All other criteria and conditions remain the same for the extended period.

Employers may be eligible for a payroll tax exemption for up to 2 years in relation to wages paid to:

• a Territory resident who, when hired, increases the total number of Territory residents employed by that business
• an existing employee of a business, who relocates from living interstate or overseas to reside in the Territory as their principal place of residence
• or a Territory resident hired to replace a former employee who resides interstate or overseas.

Commissioner’s Guideline CG-PRT-008: Hiring resident employees PDF (284.3 KB) provides further details on this exemption.