# Payroll tax deductions

A deduction may be available if your total annual Australian taxable wages are less than \$6.5 million.

Currently, for annual Australian taxable wages over the \$1.3 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 \$6.5 million.

For example, the maximum monthly deduction is \$108,333 and is reduced by \$1 for every \$4 of monthly wages over this amount. The deduction reduces to zero when monthly wages reach \$541,666.

If you are part of a group, only the designated group employer can claim a deduction. The deduction is available if the group's total Australian wages are less than \$6.5 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.

## Changes from January 2023

From 1 January 2023, for annual Australian taxable wages over the \$1.3 million threshold, the deduction will reduce by \$1 for every \$7 of taxable wages over this amount. The deduction reduces to zero when your Australian taxable wages reach \$10.4 million.

Because this change occurs during a financial year, your annual and final deduction amounts may be based on 2 different deduction calculations for the financial year ended 30 June 2023. When you lodge your return, QRO Online will automatically calculate your deduction amount.

## Wage range for deduction

The table below shows the monthly and yearly wage range for the deduction for the 2017–18 financial year onwards.

Financial year Range for deduction
MonthlyYearly
1 Jan 2023 onwards \$108,333 to \$866,666 \$1,300,000 to \$10,400,000
1 July 2019 to 31 Dec 2022 \$108,333 to \$541,666 \$1,300,000 to \$6,500,000
1 July 2017 to 30 June 2019 \$91,666 to \$458,333 \$1,100,000 to \$5,500,000

## Types of deductions

The type of deduction you can claim will depend on your circumstances and how your business operates.

Deduction type When to calculate Who can claim How to claim
Actual periodic Every periodic return (usually one month) You are not in a group and only pay wages in Queensland When you lodge your periodic return, QRO Online will calculate the deduction amount
Fixed periodic At the beginning of the financial year

You are either:

• not in a group and pay (or will pay) interstate wages
or
• the designated group employer for a group

Enter your deduction amount in the 'Fixed periodic deduction' field when you lodge your periodic return

Use our fixed periodic deduction calculator

Annual At the end of the financial year

You are either:

• not in a group
or
• the designated group employer for a group
When you lodge your annual return, QRO Online will calculate the deduction amount

### Actual periodic deductions

You may be able to claim an actual periodic deduction if you are not grouped and only pay Queensland wages. The deduction is based on the taxable wages you pay during a return period and is automatically calculated when you lodge through QRO Online.

Use our periodic liability calculator or the estimator in QRO Online to calculate your payroll tax and mental health levy liability (if applicable) for each return period.

In this example, the monthly Queensland taxable wages are \$158,521.

#### Before 1 January 2023

This is how your deduction is calculated if you pay payroll tax monthly and your taxable wages for the month are less than \$541,666.

#### From 1 January 2023

This is how your deduction is calculated if you pay payroll tax monthly and your taxable wages for the month are less than \$866,666.

### Fixed periodic deductions

You can claim a fixed periodic deduction if you:

The fixed periodic deduction estimator is calculated using the:

• estimated Queensland and interstate taxable wages for the full financial year, for non-grouped employers
• estimated total group’s Queensland and interstate taxable wages for the full financial year, for designated group employers.

Use our fixed periodic deduction calculator or the estimator in QRO Online to work out the deduction.

In most cases, you only need to calculate your fixed periodic deduction at the start of each financial year (1 July) and enter the same amount in the 'Fixed periodic deduction' field when completing each periodic return.

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

#### Changes to your fixed periodic deduction

If any of the events in this table 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.
Event When to recalculate the deduction
You start paying interstate wages First day of the return period
You paid wages that increased or decreased by more than 30% of the wages you originally estimated Last day of a return period
Your deduction is revoked or lapses The day you are notified or the previous notification runs out
Your lodgement frequency is changed First day of new return period

This example uses these estimated wages for the financial year:

• Queensland taxable wages \$387,524
• Australian taxable wages \$1,500,000.

#### Before 1 January 2023

If you are a non-grouped employer that pays interstate wages, calculate your fixed periodic deduction as shown.

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

If you pay payroll tax other than monthly (e.g. half-yearly), multiply the result of the calculation by the number of months in your return period for your fixed periodic deduction. For example, if you pay half-yearly, your fixed periodic deduction based on the figures below would be \$26,911 × 6 = \$161,466.

#### From 1 January 2023

The deduction is reduced by \$1 for every \$7 of Australian taxable wages above the \$1.3 million threshold.

### Annual deductions

The annual deduction is automatically calculated when you lodge through QRO Online.

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.

This example uses:

• Queensland taxable wages \$1,356,789
• Australian taxable wages \$1,789,776.

#### Up to 30 June 2022

If you are not a member of a group, calculate your annual deduction as shown.

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

#### From 1 July 2023

This example uses the same information as the previous example, but the deduction is reduced by \$1 for every \$7 of Australian taxable wages above the threshold.