Payroll tax deductions

A deduction may be available if your total annual Australian taxable wages are less than $5.5 million.

For annual Australian taxable wages over the $1.1 million threshold, the deduction reduces by $1 for every $4 of taxable wages over this amount. The deduction reduces to zero when your Australian taxable wages reach $5.5 million.

For example, currently the maximum monthly deduction is $91,666 and is reduced by $1 for every $4 over this amount. The deduction reduces to zero when monthly wages reach $458,333.

If you are part of a group, only one group member can claim a deduction. The deduction is available if the group's total Australian wages are less than $5.5 million.

Changes to the amount of wages you pay throughout the year will affect the deduction you can claim in each return period. If you do not employ for the full financial year, the deduction will be adjusted proportionally.

Wage range for deduction

The table below shows the monthly and yearly wage range for the deduction for the 2008-09 financial year onwards.

Financial yearRange for deduction
MonthlyYearly
2012-13 to 2017-18$91,666 to $458,333$1,100,000 to $5,500,000
2008-09 to 2011-12$83,333 to $416,666$1,000,000 to $5,000,000

Types of deductions

The table below summarises the 3 types of deductions available. The type of deduction you can claim will depend on your circumstances and how your business operates.

Deduction typeReturnWhen to calculate the deductionWho can claim this deduction
Actual periodicPeriodicEvery periodic return (usually a month)You are not in a group and only pay wages in Queensland
Fixed periodicPeriodicAt the beginning of the financial year You are either:
  • not in a group and pay interstate wages (or will pay interstate wages)
    or
  • the designated group employer for a group
AnnualAnnualAt the end of the financial year You are either:
  • not in a group
    or
  • the designated group employer for a group

Actual periodic deductions

You can claim an actual periodic deduction if you are not grouped and pay only Queensland wages. The deduction is based on the taxable wages you pay during a return period and is automatically calculated if you lodge online through OSRconnect.

You can also use our periodic liability calculator to work out your payroll tax for each return period.

Example

If you pay payroll tax monthly and your taxable wages for the month are less than $458,333, calculate your deduction as shown. This example uses monthly Queensland taxable wages of $158,521.

Image showing calculation of payroll tax

Fixed periodic deductions

You can claim a fixed periodic deduction if you are not in a group but pay interstate wages, or you are a designated group employer.

Use the fixed periodic deduction calculator to work out your deduction amount for the current financial year.

In most cases, you only need to calculate your fixed periodic deduction at the start of each financial year (1 July) and deduct that same amount from your wages in each periodic return during that year.

You should keep a record of your fixed periodic deduction on file.

Changes to your fixed periodic deduction

If any of the events in the table below happen, you will need to:

  • recalculate your fixed periodic deduction
  • and
  • deduct the new amount from your wages for the remaining periodic returns for the year.
EventWhen to recalculate the deduction
You pay interstate wagesFirst day of the return period
You paid wages that increased by more than 30% of the wages you originally estimatedLast day of a return period
Your deduction is revoked or lapsesThe day you are notified
Your periodic return period is changedFirst day of new return period

Example

If you are a non-grouped employer that pays interstate wages, calculate your fixed periodic deduction as shown. This example uses estimated Queensland taxable wages of $387,524 and estimated Australian taxable wages of $1,326,816 for the financial year.

If you are the designated group employer, calculate your fixed periodic deduction using the estimated total Australian taxable wages of the group.

Note: If you pay payroll tax other than monthly (e.g. quarterly or half yearly), multiply the result of the calculation by the number of months in your return period to obtain your fixed periodic deduction. For example, if you pay quarterly, your fixed periodic deduction based on the figures below would be $25,392 × 3 = $76,176.

Diagram showing calculation of Fixed periodic deduction

Annual deductions

The annual deduction is automatically calculated if you lodge online through OSRconnect.

If you are not in a group, calculate your annual deduction from your Queensland taxable wages using your total Australian taxable wages for that year.

If you are the designated group employer, calculate your annual deduction using the total Australian taxable wages of the group.

Example

If you are not a member of a group, calculate your annual deduction as shown. This example uses Queensland taxable wages of $1,356,789 and Australian taxable wages of $1,789,776.

Note: This example only applies if you employ for the full financial year. For part-year periods that start after 1 July and continue to 30 June, or that start on 1 July and end before 30 June (due to a status change), the deduction will be adjusted proportionally.

Image showing calculation of annual deduction

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