Payroll tax

Wages are any remuneration paid or payable by an employer to an employee for services provided.

Payments made to certain contractors may also be deemed wages.

What payments are liable for payroll tax?

Payments liable for payroll tax include:

What payments are not liable?

The following payments are not liable for payroll tax:

  • Commonwealth Paid Parental Leave Scheme payments

  • Jury duty payments

    Payments made by the court system are not liable. Payments made to an employee by their employer while on jury duty are liable, even if you are partly or fully compensated from the court

  • Reimbursements

    If in the course of work an employee incurs an expense and is reimbursed for that expense against receipts, then the payment is not a wage. You must be able to account for the payments either as an advance which is later adjusted against receipts, or payments against receipts. Any payments that do not have documentation are not accepted as reimbursements and will be liable.

  • Workers Compensation

    Payments made by an insurance company to an employee on workers compensation are not liable.

    Make up payments (the difference between the compensation payments and an employee’s regular pay) paid by the employer are liable.

What wages are exempt from payroll tax?

Exempt wages are predominately those paid by non-profit organisations that are religious institutions, charitable organisations or organisations set up for the public benefit.

Some wages are exempt based on the circumstances in which they are paid. This includes wages paid to employees on maternity, paternity or adoption leave or on military leave.

For more information on exempt wages, visit the exempt wages page.

Where are wages taxable?

All wages paid to an employee for a month's service are taxable in one jurisdiction. The nexus provisions determine which jurisdiction the wage is taxable.

If a worker performs services in only one jurisdiction in a calendar month, payroll tax is payable in that jurisdiction.


  1. The employee's principal place of residence

  2. The employer's registered Australian Business Number address/principal place of business

  3. The place where the wages are paid to the employee

  4. The place where most of the services were performed.

For more information, view Revenue ruling PTA 039 – Payroll tax nexus provisions.

Last updated: 16 April 2015