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Payroll tax discount for regional businesses

Regional employers in Queensland may be entitled to a discount of 1% on the rate of payroll tax imposed on their taxable wages.

The discounted payroll tax rate for regional business is:

  • 3.75% for employers or groups of employers who pay $6.5 million or less in Australian taxable wages
  • 3.95% for employers or groups of employers who pay more than $6.5 million in Australian taxable wages.

These rates apply from 1 July 2019 to 30 June 2023.

The subsidy component of the Australian Government JobKeeper payment is not taxable for payroll tax.

Regional employer

You are a regional employer if:

  • your principal place of employment is in regional Queensland
  • and
  • you pay at least 85% of taxable wages to regional employees.

Regional Queensland is defined as the following areas identified in the Australian Bureau of Statistics 2016 Statistical Area 4 (SA4) map:

  • Cairns
  • Central Queensland
  • Darling Downs Maranoa
  • Mackay - Isaac - Whitsunday
  • Queensland - Outback
  • Townsville
  • Wide Bay.

A principal place of employment is your registered ABN business address. If you do not have an ABN, it is where your principal place of business is located. For the purposes of the regional employer discount, your principal place of employment must be in one of the listed areas.

A regional employee is someone whose principal place of residence is in regional Queensland. (Transient and temporary accommodation does not qualify as a principal place of residence.)

Claiming the discount

If you satisfy the eligibility criteria and select the regional employer rate discount in OSR Online when lodging a payroll tax return, the discounted payroll tax rate will be applied automatically.

Your eligibility is tested each time you lodge a return. If you do not qualify for the discount in some of your periodic returns, you might still meet the eligibility requirements in your annual or final return. If you use the discounted rate in some periodic returns but you are no longer eligible by the time you prepare a final or annual return, your payroll tax will be calculated at the standard rate.

If you are a member of a group, you can claim the discount if you are eligible and other members of your group are not. This means some members of a group of employers may have different rates of payroll tax.

For example:

  • ABC Pty Ltd pays $3 million in Australian taxable wages. It is a regional employer and qualifies for the discounted payroll tax rate of 3.75%.
  • DEF Pty Ltd did not claim the discount in some of their periodic returns. But when they prepared their annual return, their annual wages were over the threshold, making them eligible for the regional discount. In the annual return, they selected the regional employer rate discount for their entire annual wages.
  • Company A and Company B are grouped for payroll tax. Their group pays $7 million in Australian taxable wages.
    • Company A is a regional employer. It will receive the regional discount and pay tax at the rate of 3.95%.
    • Company B is not a regional employer. It will not receive the discount, and will pay tax at the rate of 4.95%.

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