Quick answer: in NSW, payroll tax applies once your total Australian taxable wages exceed $1.2 million a year, charged at a flat 5.45% on the amount above the threshold, and it is paid to Revenue NSW rather than the ATO.
Payroll tax is the state tax most growing businesses forget about until they are almost paying it. Unlike income tax and GST, it has nothing to do with the ATO. In New South Wales it is collected by Revenue NSW, and it applies once your wage bill crosses the state threshold. Here is what actually applies in NSW for the 2026-27 financial year.
NSW has an annual payroll tax threshold of $1,200,000. Once your total Australian taxable wages go above that, you pay payroll tax at a flat rate of 5.45% on the amount over the threshold. NSW uses a hard cut-in rather than a sliding scale, so everything above $1.2 million is taxed at 5.45%, and everything below it is not taxed at all.
Spread across the year the threshold works out to roughly $100,000 a month, though the exact monthly figure shifts a little depending on how many days are in the month. A quick example: an employer with $1,500,000 of taxable wages for the year pays 5.45% on the $300,000 above the threshold, which is $16,350 for the year.
Payroll tax is broader than the salaries you normally think of as wages. It includes gross wages and salaries, superannuation, bonuses, commissions, most allowances, fringe benefits and termination payments. It also catches many contractor payments: if a contractor is effectively working like an employee, those payments can count as taxable wages even though the person invoices you and never appears on your payroll run. Getting the employee or contractor call right matters here, because misjudging it is one of the most common ways businesses understate their payroll tax.
You must register for payroll tax in NSW within seven days after the end of the month in which your wages first push you over the monthly threshold. You do not get to wait until the end of the year. If it is already clear your wages will cross $1.2 million for the year, it is worth registering early rather than scrambling later.
Not sure whether you are about to cross the NSW threshold? Book a free call and we will run the numbers with you.
If your annual NSW payroll tax bill is more than $20,000, you lodge and pay monthly through Payroll Tax Online. Monthly payments are due seven days after the end of each month, or the next business day if the seventh lands on a weekend or public holiday. If no tax is payable for a month, you still lodge a nil return.
June is the exception. There is no separate June monthly return, because June is rolled into the annual reconciliation. That annual return is where you square up what you actually owe for the year against what you have paid, and for 2026 it was due on 28 July. If your annual bill is under $20,000, you can generally settle up once a year through the annual return rather than paying monthly.
Payroll tax is where operating in more than one state gets complicated. If you have staff in NSW and elsewhere, you cannot claim the full NSW threshold against your whole national payroll: you apportion your wages across the states and each state's threshold applies only to its share. On top of that, all states use harmonised grouping rules, so if you run related or commonly controlled entities their wages are added together and only one entity in the group gets the tax-free threshold. Splitting a business into two companies does not hand you two thresholds. Our payroll tax by state guide shows how the thresholds and rates compare across the country.
As a rough guide, a $1.2 million wage bill is often reached somewhere around ten to fifteen full-time employees, depending on what you pay them, so payroll tax tends to arrive as a growth milestone rather than something start-ups worry about on day one. The trap is that super, bonuses and allowances all count toward the total, so you can cross the line sooner than a quick look at base salaries suggests. It pays to watch your rolling annual wages as you hire rather than checking once a year and getting a surprise.
In NSW, payroll tax starts at $1.2 million of annual wages and applies at 5.45% above that. Wages include super and many contractor payments, registration is due within seven days of the month you cross the threshold, and monthly returns fall due seven days after month end with an annual reconciliation in late July. If you are close to the line or expanding interstate, the cost of getting it wrong is real.
Do I pay NSW payroll tax if I only have a couple of employees? Only if your total annual Australian wages go above $1.2 million. Most very small teams sit well under that, but remember super, bonuses and many contractor payments all count toward the total.
Is superannuation included in NSW payroll tax? Yes. Super forms part of your taxable wages, alongside salaries, bonuses, allowances, fringe benefits and many contractor payments.
When are NSW payroll tax returns due? Monthly returns are due seven days after the end of each month, or the next business day, with no separate June return, and the annual reconciliation falls in late July.
We handle payroll tax registration and lodgement as part of our fixed-fee packages, with every question answered within 24 hours. Book your free call here.
Figures are current for the 2026-27 financial year and were checked in September 2026. This article is general information only and does not take your circumstances into account. Please seek advice tailored to your situation before acting.
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