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Payroll tax in NSW is calculated only on wages above an annual threshold, at a rate of 5.45%. Learn if your business can claim the full tax-free threshold.
On this page
Annual tax-free threshold and tax rate
Tax year
Tax-free threshold
Tax rate
1 July 2024 – 30 June 2025
$1,200,000
5.45%
1 July 2023 – 30 June 2024
$1,200,000
5.45%
1 July 2022 – 30 June 2023
$1,200,000
5.45%
1 July 2021 – 30 June 2022
$1,200,000
4.85%
1 July 2020 – 30 June 2021
$1,200,000
4.85%
The annual tax-free threshold determines when businesses need to pay payroll tax.
Your business must pay payroll tax in New South Wales (NSW) if:
it pays wages in NSW, and
your total Australian wages in a financial year are more than the tax-free annual threshold.
The payroll tax rate is applied to the wages amount above the threshold. This will be your payroll tax liability.
Monthly threshold for the 2024-25 financial year
Days in the month
Threshold
28
$92,055
30
$98,630
31
$101,918
The monthly threshold determines when businesses need to register for payroll tax.
Your business must be registered for payroll tax in NSW if:
it pays wages in NSW, and
its total Australian wages are more than the monthly threshold during any month.
If your business started or ceased to employ part way through the financial year (FY), you will not be entitled to the full threshold.
You will instead receive an apportioned threshold, which is calculated by dividing the number of days that you employ staff by the total number of days in the FY.
Your payroll tax will be calculated on the amount above the threshold.
Example
NSW wages (employed for 184 days in a year of 365 days)
$1,500,000
2024-25 threshold
$604,931.51
Payroll tax calculated on
$895,068.49
NSW tax-free threshold x (Number of days staff are employed ÷ Total number of days in the FY) = 2024-25 threshold $1,200,000 x (184 ÷ 365) = $604,931.51
If your business pays taxable wages in NSW and in another Australian state or territory, your payroll tax threshold will be calculated based on the proportion of your total wages that are paid in NSW.
Example
NSW wages (employed for 365 days in a year)
$900,000
Queensland and Victorian wages
$2,100,000
Total Australian wages
$3,000,000
2024-25 threshold
$360,000
Payroll tax calculated on
$540,000
NSW payroll tax threshold x (Total NSW wages ÷ Total Australian wages) = 2024-25 threshold $1,200,000 x ($900,000& ÷ $3,000,000) = $360,000
If your business pays taxable wages in NSW and in another Australian state or territory, your payroll tax threshold will be:
calculated on the proportion of your total wages that are paid in NSW during the financial year (FY), and
may be further apportioned depending on the cease date of employment in each state/territory.
Example 1
In the 2024-25 FY, Business A only paid wages from 1 July 2024 to 31 December 2024 in New South Wales (NSW), Victoria (VIC) and Queensland (QLD), or 184 days in a leap FY (365 days).
NSW wages paid 1 July 2024 – 31 December 2025
$1,000,000
VIC and QLD wages paid 1 July 2024 – 31 December 2024
$2,000,000
Total Australian wages
$3,000,000
Business A is not entitled to the full annual tax-free threshold in NSW due to its interstate wages. The apportioned NSW threshold is calculated as follows.
NSW payroll tax threshold x (Total NSW wages ÷ Total Australian wages) $1,200,000 x ($1,000,000 ÷ $3,000,000) = $400,000
Business A's tax-free threshold is then further apportioned to 184 days in a leap FY (365 days).
$400,000 x (184 ÷ 365) = $201,643.84
The tax-free threshold in NSW for Business A is $201,643.84 for the 2024-25 FY.
Example 2
In the 2024-25 FY, Business B, who employs in multiple states, ceased employing in NSW as of 31 December 2024. Business B employed in NSW for 184 days in a leap FY (365 days).
Business B continued to employ and pay wages in VIC and QLD for the full FY.
NSW wages paid 1 July 2024 – 31 December 2024
$1,000,000
VIC and QLD wages paid 1 July 2024 – 30 June 2025
$2,000,000
Total Australian wages
$3,000,000
Business B is not entitled to the full annual tax-free threshold in NSW due to its interstate wages. The apportioned NSW threshold is calculated as follows.
NSW payroll tax threshold x (Total NSW wages ÷ Total Australian wages) $1,200,000 x ($1,000,000÷ $3,000,000) = $400,000
The tax-free threshold in NSW for Business B is $400,000 for the 2024-25 FY.
The fact that Business B ceased employing in NSW in the middle of the FY has no further impact on the threshold calculation because the employer employed in other states for the full FY.
Only one group member can claim the payroll tax threshold in NSW.
If your business is part of a group and you are the Designated Group Employer (DGE) or Single Lodger (SL), you must include the taxable wages of the other group members in your returns.
If you are a Non-Threshold Claimer (NTC) of a group, you cannot claim the threshold.
Businesses can be grouped for payroll tax in several ways. Read the grouping section for more details.
Wages paid only in NSW
For grouped businesses with only NSW wages, the gross wages of all group members must be either:
added together and a single threshold deduction applies to the group SL, or
one group member claims the threshold (the DGE) and other members will not receive a threshold (the NTCs).
Wages paid in NSW and interstate
For grouped businesses with NSW and interstate wages, the threshold is calculated as a proportion equal to the ratio of total group NSW wages to total group Australian wages.
If a business only pays taxable wages in NSW and is grouped with another business only paying taxable wages in Victoria, the wages of both businesses will need to be declared in returns to calculate the total group Australian wages.
Lodging as a DGE or SL does not affect the total group liability.
Example
Business
NSW wages
Interstate wages
Business A
$500,000
$800,000
Business B
$100,000
$600,000
To calculate the group threshold, a DGE or SL will need to use the following formula:
NSW payroll tax threshold x (Group NSW wages ÷ Group Australian wages) = Group's threshold $1,200,000 x [($500,000+ $100,000) ÷ $2,000,000] = $360,000
