When do I have to pay payroll tax?
Payroll tax is not business structure specific, but is instead determined by the activities of the business, for example, if you employ people.
If the total amount of Australian wages you pay exceed the tax-free threshold of a particular state or territory where you employ people, you will need to register payroll tax in that jurisdiction.
Sole trader and company
Payroll tax is regulated by the state governments. Each state’s threshold amounts and exemptions are different, so it’s important to get it right.
The amounts you pay to contractors, whether as sole traders, companies, trust businesses, or partnerships, may be liable for payroll tax. Even if they have an ABN, that is not enough to just exempt your payments to such sub-contractors from payroll tax.
You will need to check the exemption rules of your jurisdiction to find out what you need to do to substantiate your claim to exempt a particular contractor payment.
- Find out more about payroll tax in your state and territory.