Payroll tax

Payroll Tax Rates

The following payroll tax rates and surcharges apply. The annual Australia wide wages apply at the group level.

Please note, the payroll tax surcharge does not apply to eligible universities with an ACT campus which includes: Australian Catholic University; Charles Sturt University; The Australian National University; The University of New South Wales; and University of Canberra. Further, their general rate of payroll tax is capped at 6.85 per cent.

2025-26 Financial Year

Table 1: 1 July 2025 to 31 December 2025

On 3 September 2025 the Payroll Tax Amendment Bill 2025 was introduced into the Legislative Assembly. The Bill applies to employers with total Australia wide, or group Australia wide, wages of more than $150 million and when passed will impose a new tax rate from 1 January 2026.

Table 2: 1 January 2026 to 30 June 2026 (pending the passing of the Payroll Tax Amendment Bill 2025)

2026-27 Financial Year

The Government has decided on changes to payroll tax rates from 1 July 2026. Changes were announced as part of the 2025-26 Budget. Further changes have also been decided on the payroll tax rates for annual Australia wide wages of more than $50 million but not more than $150 million.

Table 3: 1 July 2026 to 30 June 2027

Taxable wages

Payroll tax is applied to payments that are ‘taxable wages’. Taxable wages refer to any payment that an employer provides to an employee in return for services. For payroll tax in the ACT, this includes:

• remuneration, wages, salary, commission, bonuses, allowances or other benefits
• superannuation contributions
• payments to contractors
• director's fees
• payments to employees (before or after retirement or termination) that relate to their employment term, such as accrued leave and any other bonuses or loading)
• eligible termination payments
• the value of any payments made in kind (where no money is involved but goods or services are exchanged for other goods or services)
• payments to employment agencies
• benefits (see Fringe Benefits circular (PTA003.1))
• wages paid to sick or injured employees
• employer contributions to employee share schemes.

Exempt wages

Some wages are exempt from ACT payroll tax and excluded from taxable wages; these include:

• new starters receiving eligible training
• paid maternity, adoption and primary carer leave
• Paid Parental Leave (PPL)
• the tax-free part of genuine redundancy payments
• workers compensation payments made in accordance with workers compensation schemes. See Workers' compensation payments circular (PTA015)

For a more detailed list of exempt wages, refer to Part 4 of the Payroll Tax Act 2011.

Contractors

Many Australian businesses engage contractors or subcontractors instead of permanent employees. Payments to these contractors are considered taxable wages and are subject to payroll tax unless the contract is exempt.

For more details on the ins and outs of contractors, payroll tax and employer liability, visit our Contractors page.

Employment agents

Regardless of whether the employer or the employment agency pays the wages, employment agencies are the ones who pay the payroll tax on the wages for people they hire out.

In the ACT, employment agents can under certain circumstances exclude from payroll tax any payments they make to independent contractors.

Any GST included in the employment contract is not subject to payroll tax.

If you’re an employment agent and need additional information, contact us or see the Employment Agents circular (PTA074.5).

Overseas payments

You pay payroll tax on wages paid in the ACT for services provided outside Australia for a period of less than six months.

Under circumstances in which an employee is on assignment overseas for more than six months, any wages paid or received in the ACT (including the first six months) are not subject to payroll tax. The six-month period doesn’t have to fall within one financial year, but it must be continuous.

However, if an employee assigned overseas returns to Australia under the following circumstances, it doesn’t count as a break in continuity:

• the employee returns for a holiday
• the employee returns for less than a month to perform work that relates exclusively to the overseas assignment
• in either case, the employee immediately returns overseas to perform further work on the assignment.

For more information, see the Payroll Tax Nexus Provisions circular PTA039.

Payroll Tax Australia

All Australian states and territories have a payroll tax system, and have worked together to ensure their legislation is aligned (excluding rates and thresholds).

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