Payroll Tax NSW: Rate, Threshold & How It Works
Payroll tax nsw for 2026-27 is 5.45% of NSW taxable wages above the $1,200,000 annual threshold. Whether you owe it depends on your total NSW taxable wages, whether you are grouped with related businesses, and how you pay workers, including labour hire. This guide, part of our wider payroll for small business series, explains the rate, who pays, how to work it out and what employers must keep on record.
- Payroll tax nsw for 2026-27 is 5.45% of NSW taxable wages above the $1,200,000 annual threshold.
- It is an employer tax on wages, so it is not deducted from an employee's pay.
- Other states have different thresholds and rates, including Victoria at $1,000,000 and 4.85%, Queensland at $1,300,000 and 4.75%, and Western Australia at $1,000,000 and 5.5%.
- Keep time and wage records for 7 years and register with Revenue NSW before you pass the threshold.
Payroll tax nsw: rates and rules
Revenue NSW collects payroll tax under the Payroll Tax Act 2007 (NSW). The figures below are for 2026-27 and change from time to time, so check Revenue NSW before each financial year.
| Item | Figure or rule | Applies from |
|---|---|---|
| NSW payroll tax rate | 5.45% of NSW taxable wages above the threshold | 2026-27 |
| NSW annual threshold | $1,200,000 | 2026-27 |
| Victoria | $1,000,000 threshold at 4.85% | 2026-27 |
| Queensland | $1,300,000 threshold at 4.75%, up to $6.5M | 2026-27 |
| Western Australia | $1,000,000 threshold at 5.5% | 2026-27 |
| Wages tax is charged on | Taxable wages, which can include salary, super and some other benefits | Ongoing |
| Regulator | Revenue NSW | Ongoing |
Who pays payroll tax nsw
Payroll tax is paid by employers, not workers. Size matters, because most small businesses sit below the threshold and pay nothing.
| Employer situation | What it means |
|---|---|
| Small business under the threshold | No payroll tax is payable while NSW taxable wages stay at or below $1,200,000 a year. |
| Growing business near the threshold | Track wages each month, and register with Revenue NSW before you expect to pass the line. |
| Business above the threshold | Tax of 5.45% applies to NSW taxable wages above $1,200,000 for 2026-27. |
| Related businesses or groups | Wages may be grouped, so check the group rules with Revenue NSW before assuming each entity has its own threshold. |
| Labour hire provider or host | Payroll tax can apply to wages paid to labour hire workers, so confirm who is liable in the contract and with Revenue NSW. |
| Employer in several states | Each state has its own rules, thresholds and rates, so check the state where the work is done. |
How to calculate payroll tax nsw
The calculation is simple once you have the right wage total. The hard part is knowing which payments count as taxable wages.
- Add up all NSW taxable wages for the period, including salary, wages, super and other payments Revenue NSW treats as wages.
- Include wages paid to workers engaged through related businesses if grouping applies.
- Compare the total with the $1,200,000 annual threshold for 2026-27.
- If the total is over the threshold, apply 5.45% to the amount above the threshold.
- Lodge returns and pay Revenue NSW by the due dates it sets.
| Worked example | How it works |
|---|---|
| Below the threshold | A business with NSW taxable wages under $1,200,000 for the year pays no payroll tax. |
| Above the threshold | A business with wages of about $1,300,000 would be taxed on the $100,000 above the line, at 5.45% (indicative — confirm with Revenue NSW). |
| Minimum wage staff | A full-time worker on the national minimum earns $1,004.90 per 38-hour week from 1 July 2026, and that pay counts towards the wage total. |
Payroll tax nsw checklist for employers
Good records are your best protection if Revenue NSW or the Fair Work Ombudsman reviews your business. Finance teams usually find the gaps at year end.
- Track NSW taxable wages monthly, not only at year end, so you see the threshold coming.
- Register with Revenue NSW before you expect to exceed the $1,200,000 annual threshold.
- Pay super at the same time as wages, so it reaches the fund within 7 business days of payday, and include it in your wage totals.
- Keep employee time and wage records for 7 years and give payslips within 1 working day of payday.
- Report payroll information to the ATO through Single Touch Payroll on or before each payday.
- Review related entities and labour hire arrangements each year for grouping and contractor rules.
Worker rights and what to do if you are underpaid
Payroll tax is the employer's cost. You should never see it taken out of your wages, and its existence does not change what you must be paid.
- Check your award pay guide, because the national minimum wage is $26.44 per hour from 1 July 2026 and awards usually pay more.
- Compare your payslip with your hours, rate, loadings and super, which should be 12% of ordinary time earnings.
- Raise any difference in writing with your employer and keep copies.
- If it is not fixed, contact the Fair Work Ombudsman or call the Fair Work Infoline on 13 13 94.
Our guides to payslip explained, backpay and minimum wage Australia cover each step in detail.
Common mistakes to avoid
- Waiting until the threshold is passed before registering with Revenue NSW, and then backdating a bill.
- Forgetting that super and some benefits can count as taxable wages, so the wage total is higher than payroll shows.
- Ignoring related businesses or groups, then assuming each entity has its own $1,200,000 threshold.
- Applying NSW rates to staff who work in another state, where different thresholds and rates apply.
- Mixing up payroll tax with the super guarantee or Single Touch Payroll reporting, which are separate obligations.
- Applying the award rate wrongly, for example under the fast food award, which then understates wages.
Payroll tax nsw FAQ
What is the payroll tax rate in NSW?
For 2026-27 it is 5.45% of NSW taxable wages above the $1,200,000 annual threshold. Revenue NSW sets the rules and collects the tax, so check its current guidance before each financial year.
What is the payroll tax threshold in NSW?
The annual threshold is $1,200,000 for 2026-27. If your NSW taxable wages stay at or below it you pay no payroll tax, but you should still track your wages and plan for growth.
Do I pay payroll tax on super and labour hire?
Super can count as part of taxable wages, and wages paid to labour hire workers can be caught in some cases. Check your contract and the Revenue NSW rules, because liability depends on the arrangement.
Does payroll tax come out of my pay?
No. Payroll tax is paid by the employer, not by employees, and it should not be deducted from your wages. If your pay looks wrong, check your payslip and contact the Fair Work Ombudsman.
Next step: check your payroll tax nsw position
Add up your NSW taxable wages, compare them with the $1,200,000 threshold, and confirm the position with Revenue NSW if you are near it. At TQN Personnel, we place and pay labour hire workers across Sydney and can help host employers with staffing. This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman, the ATO or an employment lawyer for your situation.