Payroll changes from 1 July 2026

The higher rate will apply to:

• an employer that has Australia-wide wages of $100 million or more in a financial year
• an employer that is part of a payroll tax group where the group’s combined Australia-wide wages are $100 million or more in a financial year.

For grouped employers, the test is applied at the group level. This means an individual employer may be liable at the 6.5% rate even if its own Australia-wide wages are below $100 million, if the Australia-wide wages of its group reach or exceed that amount. The existing grouping rules in Part 5 of the Payroll Tax Act 2009 (the Act) continue to determine whether employers are grouped and how group liabilities are administered.

The amendments do not change:

• the existing 5.5% payroll tax rate for employers or groups below the $100 million threshold
• the $2.5 million annual threshold
• the existing deduction settings
• the current grouping rules
• or the existing monthly return, annual return and annual adjustment framework.

If your business, or where relevant your payroll tax group, has Australia-wide wages below $100 million, the existing 5.5% payroll tax rate will continue to apply. The current $2.5 million threshold and deduction settings will also continue unchanged.

If you are a member of a payroll tax group, the higher rate test is applied to the group’s combined Australia-wide wages, not to your business alone. If the group’s Australia-wide wages are $100 million or more, the 6.5% rate will apply to the taxable Territory wages of the relevant employer.

Employers who are liable for payroll tax must continue to lodge monthly returns for each month other than June, and an annual return for June that includes the annual adjustment. That existing return framework does not change.

For monthly returns, the higher rate is intended to apply during the financial year, rather than only being worked out at the end of the year. In practice, where an employer or group expects its Australia-wide wages for the financial year to be $100 million or more, the 6.5% rate should be applied in monthly returns. Where there is a prior year wage history, previous financial year wages may be used as the starting point unless the employer provides a current year estimate. Monthly payroll tax remains provisional and is reconciled through the annual return and annual adjustment process.

For monthly returns, the higher rate is intended to apply during the year based on whether your business, or where relevant your group, is expected to have Australia-wide wages of $100 million or more for the financial year. Previous year wages may be used as the starting point unless you provide a current year estimate. Any difference is reconciled in the annual return.

Monthly payroll tax remains provisional. If your expected Australia wide wages change during the year, that may affect whether the higher rate should apply. Any overpayment or underpayment is resolved through the annual adjustment in the June annual return.

The higher rate also applies where an employer’s circumstances change during the year and section 84 of the Act requires payroll tax to be worked out separately for a relevant period. This can happen, for example, if an employer joins or leaves a payroll tax group, or ceases paying wages in Australia.

Where section 84 applies, each relevant period is assessed separately for the purpose of the $100 million threshold. Unlike the existing deductible amount, which is prorated for a relevant period under the current Schedule formulae, the $100 million threshold is not prorated. Instead, it applies as a fixed threshold to the Australia wide wages of each relevant period.