Introduction to taxable wages

You will need to know what wages are taxable when lodging your payroll tax returns.

When completing your returns, make sure you correctly declare all your taxable wages, including:

  • gross salary and wages
  • allowances
  • bonuses
  • commissions
  • directors fees
  • superannuation contributions
  • fringe benefits
  • termination payments
  • contractor payments
  • shares and options.

Gross salary and wages include annual leave, sick leave and long service leave. This is the total before any deductions (e.g. PAYG) have been applied.

Most allowances are taxable, but exemptions are available for motor vehicle and accommodation allowances.

Directors fees are payments made to a person for services they perform as a director. They are taxable regardless of where they are paid (e.g. director's trust, partnership or incorporated entity).

Other remuneration for directors, such as superannuation contributions and gross salary and wages, is also taxable.

All employer superannuation contributions are taxable, including payments to non-employee directors and payments made under salary sacrifice arrangements or paid outside your payroll system (e.g. top-up payments to a director's superannuation fund).

Fringe benefits are taxable, calculated on the Type 1 and Type 2 aggregate amounts grossed up by the Type 2 gross-up factor.

Fringe benefits that have a nil taxable value under the Fringe Benefits Tax Assessment Act 1986 will also have a nil taxable value for payroll tax purposes.

Read the public ruling on fringe benefits (PTA003) for information on how to apportion the Queensland component of your fringe benefits.

Termination payments include amounts you pay to an employee when they stop working and to non-employee directors who terminate their office. They are liable for payroll tax unless they are exempt from income tax.

Any payments you make to contractors, subcontractors and consultants are taxable unless they meet one of the 9 contractor exemptions.

If you are required to pay payroll tax on payments to a contractor who provided materials and equipment, you may be eligible to apply an approved non-labour deduction.

You should also consider if your contractor is a common law employee.

Use our contractor provisions interactive help to determine if your contractor payments are taxable.

Shares and options that have been granted to an employee, deemed employee or company director are taxable. If they are not defined as an Employee Share Scheme (ESS) interest, they may be classed as a fringe benefit.

Apprentices and trainees

Payments to apprentices employed under the Further Education and Training Act 2014 (FET Act) are generally exempt.

Payments to trainees registered under the FET Act are exempt unless before commencing the traineeship, the trainees worked for you for either:

  • 3 months or more full time
  • 12 months or more, part time or casually.

The exemption applies for any certificate registered under the FET Act, including certificate IV. Other rules apply for certificates II and III.

You may also be entitled to a payroll tax rebate.

Interstate employees

Interstate wages are not liable for payroll tax in Queensland but can affect your deduction entitlement.

Learn how payroll tax applies for employees working in multiple states. You can also use our taxable wages interactive help to determine if you should declare your wages in Queensland or another state or territory.

Read the public ruling on payroll tax nexus provisions (PTA039).

Also consider...