Grouped employers 2026 payroll tax annual return

• Preparing and lodging the return in QRO Online
• Reporting requirements for the annual return
• Meaning of non-grouped and how to declare a change in status
• Overview of payroll tax and what constitutes taxable or non-taxable wages
• Common errors and questions

Welcome to those who are new, and those who are returning for another year, to learn about the payroll tax annual return here in Queensland. My name is Simon from the Queensland Revenue Office, and I will be delivering this video for you today with my colleague, Alanna.

Before we begin this video, we will briefly discuss a few changes to the payroll tax annual return form you will need to be aware of, which are relevant to the 2026 annual return. Please be aware that the information presented in this video is accurate as of the publishing date and may be subject to change in the 2027 financial year.

Firstly, if you have not ceased to employ Australia-wide as of 30 June 2026, you will be asked whether you have ceased to employ in Queensland as of 30 June and are continuing to employ interstate. You will also be asked whether you (or your group) are expected to pay less than $1.3 million in Australian taxable wages for the 2027 financial year. This is a change from the previous financial years where the form only required you to indicate whether you have ceased to employ Australia-wide.

Second, if your employer status is changing as of 30 June 2026—and you are remaining, or will become, a designated group employer—where you are asked to provide the details of your group members, you will also be asked whether each of your group members employ in Queensland.

Next, if you tell us you are eligible to claim the regional employer discount, you will now be asked to confirm you meet the eligibility requirements, being that both your principal place of employment is in regional Queensland and you have paid at least 85% of your Queensland taxable wages to regional employees.

And finally, if you are a designated group employer, your mental health levy reconciliation page will automatically populate with your individual and group wages you’ve provided in the previous page, if the mental health levy portion covers the same dates as your annual return.

The information covered in this video is designed for taxpayers in Queensland and is governed by two main bodies of legislation: the Payroll Tax Act 1971 and the Taxation Administration Act 2001.

We’ll be covering a variety of topics in this video. The order of information has been designed to replicate the cycle of the annual return process; starting with an overview of the payroll tax annual return, to what you need to know prior to lodging, through to lodging your return and what to do after you’ve lodged.

To make it easy, there are timestamps in the description below for each of these topics.

The first topic to start us off with is looking at some of the annual return basics such as the who, what and when for lodging your payroll tax annual return.

Some of the basics you will need to know for the annual return are:

• The due date is 21 July every year. However, this may change if the date falls on a weekend. For this financial year, the due date is the 21st of July 2026. We are mindful that the due dates for other jurisdictions are different; however, it is important to mention that any lodgement or payment received after the 21st of July may be subject to interest and penalty tax.
• All lodgements for the annual return are to be made through our online platform, QRO Online.
• All taxpayers who are registered for payroll tax in Queensland, including members of a payroll tax group, must lodge an annual return. In Queensland, there is no ‘single lodger’ like in some of the other jurisdictions. All entities, including members of a group, must lodge their own annual return. This also includes registered taxpayers who have taxable wages below $1.3 million for the financial year; you must lodge a return even if the payroll tax liability will be nil.
• The annual return generally reconciles the wages for the full financial year, unless a change of employer status has occurred part way through the financial year.

A common question we get asked is why wages for a full financial year needs to be declared in the annual return, if the periodic returns have already been submitted. The answer is that the annual return acts as a reconciliation for the full financial year. If there are any discrepancies in your periodic returns compared to your annual return, this will be calculated and reconciled in your annual return. The periodic returns lodged throughout the year are captured in the ‘Less total periodic amounts’ field of the return, which is then deducted from the payroll tax amount for the full financial year.

It is important to note, this ‘Less periodic amounts’ figure is the amount of payroll tax you have already declared for the year so far. It does not include any interest, penalty tax or mental health levy amounts you may have paid.

The final payroll tax liability or credit is shown in the ‘Liabilities’ section of your annual return form, under ‘Payroll tax liability/credit’. Note this amount is for payroll tax only and also does not include any interest or penalty tax, or mental health levy amounts. Later in this video, we will discuss the liabilities page in more detail.

If you wish to view a summary of the prior periodic payroll tax amounts for your annual return, you can go to the ‘Year to date returns’ tab in your QRO Online account and view the payroll tax assessed column.

Another common question we get asked is, ‘Do we have to lodge a separate periodic return for June?’.

In Queensland, if you are a monthly lodger, there is no periodic return for the month of June. And if you are a half-yearly lodger, there is no January to June periodic return. Instead, in most instances, employers will lodge an annual return covering the full financial year, which will capture the liability for your June or January to June wages.

If you are unsure which period of wages you must declare, you can check the first page of your annual return, which will have a start and end date. Generally, this will cover the full financial year; however, the dates may be different if you have had a change of employer status during the financial year. Therefore, it is always best to review these dates and ensure you provide the wages for the period stated.

There are three types of employer status in Queensland: non-grouped, group member and designated group employer.

On this slide, you can see the difference between a non-grouped entity and a grouped entity. A grouped entity can either be a group member or a designated group employer. If you operate under a single ABN but employ in multiple locations throughout Queensland or Australia, you are considered one taxpayer for payroll tax purposes and are required to lodge as a non-grouped employer.

It is important to note that a business does not necessarily need to employ in Queensland to be considered grouped. However, they must employ in Queensland in order to be registered for payroll tax in Queensland. Connected or related businesses may be grouped for payroll tax, depending on the nature of the connection or relationship. The Payroll Tax Act outlines when grouping applies, and we will discuss this on the next slide.

If a group of businesses meets the criteria for registration, then all members who have employees in Queensland must register for payroll tax in Queensland. One member of the group becomes the designated group employer. Sometimes, we refer to them as the DGE, and they are responsible for claiming the deduction on behalf of the group. The DGE must always be an entity which employs in Queensland and be registered for payroll tax.

A business may be connected to other businesses under the payroll tax grouping provisions. Our website has detailed information regarding the provisions and how payroll tax groups are formed. Broadly speaking, a business may be grouped with other businesses if any of the below apply:

• Corporations are related bodies corporate.
• The businesses have common employees.
• The same person, or set of persons, have a controlling interest in 2 or more businesses.
• An entity has a tracing interest.
• A person belongs to 2 or more groups, and the groups are merged into 1.

This slide summarises the reporting requirements for each employer status for the annual return. As a non-grouped employer, make sure you have your Queensland taxable wages, Queensland non-taxable wages and interstate wages ready before you begin to lodge your annual return. The mental health levy will automatically reconcile in your annual return.

A quick note on interstate wages here—when we refer to interstate wages in this video, we are referring to wages which are considered taxable in other jurisdictions.

Please note, if your employer status will be changing from non-grouped employer to a group member from 1 July, you must provide your new DGE with your estimated Queensland taxable and interstate wages for the 2027 financial year, as the DGE will require this information in their first periodic return. This information must be provided to your DGE by the 7th of July.

Group members must declare their Queensland taxable wages, Queensland non-taxable wages and interstate wages for the full financial year in their annual return, unless a change of employer status (such as becoming a member of a different group) has occurred.

If you changed groups during the 2026 financial year, you would only declare wages from the date you joined the new group up to 30 June 2026, and provide your new DGE with your Queensland taxable and interstate wages from the date on which you joined the new group. Note that if you did change groups during the financial year, you will have been required to complete a final return and provide the DGE of the group you have left your Queensland taxable and interstate wages, and your total periodic mental health levy liability amount for the final return period.

Group members must also provide certain wage information to their DGE to enable the DGE to claim any deduction entitlement and to reconcile the mental health levy on behalf of the group. The information you must provide your DGE are:

• your Queensland taxable and non-taxable wages
• your interstate wages
• your periodic mental health levy liability amounts as a member of the group; if you are unsure about your mental health levy liability, you can go to the ‘Year-to-date returns’ tab in QRO Online and view the mental health levy assessed column.
• and
• finally, your estimated Queensland taxable and interstate wages for the 2027 financial year, which must be provided by the 7th of July.

If you change groups part way through the 2026 financial year, you will only declare and provide your DGE with your wages from the date you joined the group to the 30th of June. For example, if you joined the group on the 1st of February 2026 and remained part of that group until the 30th of June 2026, in your annual return, you would declare your Queensland taxable and interstate wages for the period of the 1st of February through to the 30th of June 2026. You will also need to provide your DGE with this information. Additionally, you will need to provide your total periodic mental health levy liability amounts for the February to May 2026 periodic returns if you lodge monthly.

For the DGE, in the annual return, you will need to declare:

• your own Queensland taxable wages
• Queensland non-taxable wages
• and
• interstate wages for the full financial year, or from the date you became the DGE for the group if it is after the 1st of July 2025.

In addition, you should have received the following information from your group members prior to lodging your return:

• each group member’s total Queensland taxable and interstate wages for the full financial year, or from the date they joined the group if they joined the group part way through the 2026 financial year
• each group member’s total periodic mental health levy liability amounts
• and
• each group member’s estimated Queensland taxable and interstate wages for the 2027 financial year.

Once you have lodged your annual return, you will then need to provide each of your group members with the group’s total estimated Queensland taxable and interstate wages for the 2027 financial year. This information is required prior to lodging the first periodic return of the 2027 financial year. You must provide this information to your group members by the 28th of July. You will also need to advise your group members whether or not the total group wages have exceeded $6.5 million for the 2026 financial year.

In this section, we will look at some steps you can take to ensure you are ready to lodge the annual return by the due date of the 21st of July.

The annual return must be lodged through QRO Online. To check if you have successfully set up and linked your personal account and are ready to go, look for the pictured tiles on your home page in QRO Online. If you can see the ‘Add account’, ‘Registration’ and ‘Submit enquiry’ tiles but are missing the ‘View accounts’ tile, you will need to contact us on 1300 300 734 to request assistance with linking your personal QRO Online account with the business’s account.

We recommend logging in prior to the due date to confirm that you are linked as an administrator to the entity in QRO Online.

If you do not have a QRO Online account, you will need to create one before you are able to lodge any returns. You will need to have a personal account and be linked as an administrator to the entity for which you will be lodging returns.

To register a business for payroll tax, you will need to submit a registration form from your personal QRO Online account, which is processed by our office. You will then receive a notification from our office that your registration application has been processed, and you will be provided with instructions to link your personal QRO Online account to the business.

To check who is currently linked as an administrator on the account, click on the View accounts tile on the homepage. This will display all your taxpayers for the respective revenue streams. To find the contact information of the administrator, click on Show administrator details on the right-hand side. A pop-up screen will appear with the administrator’s contact information.

If you cannot see the ‘View accounts tile’ but instead see a tile called ‘Identity verification’, this means you have not successfully verified your identity in QRO Online. We recommend reviewing your personal details or checking that the primary and secondary identification documents provided have been verified.

If you don’t have Australian documents or are unable to verify your 2 forms of ID, you can request manual verification. See the link in the description for more information.

Before you lodge, you also need to make sure your contact details are correct in QRO Online. To check this, go to the ‘Manage details’ tab on the left-hand side of your QRO Online dashboard. The payroll tax service address is where we send correspondence to, and the payroll tax business address is the physical address of your business.

Make sure you have lodged all your periodic returns before you lodge your annual return. If you have any outstanding periodic returns, these will show as overdue in the ‘Returns’ tab in QRO Online. You will not be able to lodge your annual return if you have any outstanding periodic returns.

Also, you will need to check that your employer status is correct prior to lodging. This is especially important if you have undergone a change of employer status during the 2026 financial year.

If you are unsure of the employer status which you are currently under in our records, you can refer to the dashboard of your QRO Online account. Alternatively, you can refer to the first page of your 2026 annual return.

To summarise, before you lodge your annual return, you will need to:

• Make sure your personal QRO Online account is linked to the entity in QRO Online.
• Make sure your contact details are correct by reviewing the ‘Manage details’ tab within QRO Online.
• Check that you have no outstanding periodic returns for the 2026 financial year.
• Check that your employer status is correct. You may need to lodge a final return before you can lodge your annual return.

If you have identified you need to change your employer status, this is known as a change of status and can be done by submitting a final or annual return, depending on the date on which the change of status occurred.

The Payroll Tax Act requires a change of status to be reported to our office. The due date to report the change is 21 days after the change occurs, and interest and penalties may apply if you do not advise us on time. However, there can be multiple reasons for a change of status. Your business undergoes a change of status if:

• You become, or cease to be, the designated group employer of a group.
• You become, or cease to be, a group member. This includes where you leave one group to become a member of another group but still remain a group member.
• You stop employing Australia-wide and do not intend to employ for the rest of the current or next financial year.
• An administrator, receiver manager, liquidator or restructuring practitioner is appointed or ceases.

Let’s go through some common scenarios of status changes. It is important to remember as we look at these scenarios, that when we say entities or businesses, we’re referring to an individual business with its own ABN.

First, the below scenarios may be considered a change of employer status:

• A business is changing groups, but their employer status remains the same. For example, one group member could be moving to another group as a group member because the board of directors has changed, and the association with other businesses has ceased.
• Employees being transferred to a business with a new ABN, and the current business ceases to employ in Australia.
• A business is no longer associated with other businesses. For example, they no longer share the same board of directors and the grouping provisions no longer apply. The business’s employer status will change from grouped to non-grouped.
• A business is under DGE status and ceases to employ in Queensland. They continue to employ interstate, and there are other members of the group who continue to employ in Queensland. In this case, the DGE undergoes a change of status to become an interstate-only group member; in this case, the group will need to appoint a new DGE who employs in Queensland.
• A business goes into external administration. It is important to note that the questions in the annual return relating to the appointment or cessation of administrators are applicable only when a business has become insolvent or is subject to a restructuring plan.

Next, let’s go through some scenarios where a change of status has not occurred:

• A business changes tax accountants, financial officers or bookkeepers.
• A business changes its name, but the ABN remains the same.
• A business changes owners. In this instance, it would be worth looking at the grouping provisions (for example, controlling interests), to see if any of them now apply. If the owners are changing but the ABN remains the same, this in itself is not a change of status.
• Another example is where a group member is employing in Queensland, and their Australia-wide taxable wages have fallen below $25,000 per week. However, the combined wages of all the businesses in the group continue to exceed the payroll tax threshold. This is not a status change because the payroll tax threshold requirement is based on the total group wages.
• A business is under group member status and has operations ceasing in Queensland but continues to employ in other states in Australia. There are other members of the group who continue to employ in Queensland. The group as a whole remains over the payroll tax threshold. This is not a status change because the group member did not cease to employ Australia-wide. The group member will still be required to lodge their 2026 annual return. They should indicate in their annual return that they have ceased paying wages in Queensland, and our office will consider a change to their lodgement obligations. We will cover this situation in the next slide.

If you have ceased employing in Australia, select Yes to the ‘Have you ceased to employ Australia-wide?’ question. This will generate a request for registration cancellation which will be processed by our office.

If you haven’t ceased employing Australia-wide, but have either:

• ceased employing in Queensland during the 2026 financial year, but will continue to employ interstate
• or
• you, or the group together if you are grouped, will not pay more than $25,000 in Australia-wide taxable wages in any week of the 2027 financial year

Then, you will still need to lodge your 2026 annual return. You will need to answer No to the ‘Have you ceased to employ Australia-wide?’ question. Two additional fields will appear where you can advise us of any relevant changes to your circumstances.

So, if you have identified that you need to change your employer status, the next step is to determine when the change occurred. If your employer status changed part way through the 2026 financial year and you have not yet lodged a final return to report the change, you must complete a payroll tax final return in QRO Online prior to lodging your 2026 annual return.

If the DGE or any other members of the group have had a change of status during the 2026 financial year, the DGE must also lodge a separate mental health levy final return to reconcile the mental health levy on behalf of the group.

If you have lodged a final return to indicate a change of status, and have continued to employ in Queensland since, you will need to complete your 2026 annual return.

To lodge a final return for a change of status which occurred during the 2026 financial year, you can go to the ‘Returns’ tab in QRO Online and click on the blue button called Lodge Final Returns.

Our office will work towards having your change of status processed by the annual return due date so that your lodgement is under the correct status. If you do not receive confirmation that the change has been processed, you must still lodge your annual return by the due date under your existing status to avoid any interest and penalties for late lodgement. The office can process the status change after the annual return is lodged and adjust the return if required.

If you are changing your employer status on the 1st of July 2026, you can notify us in the 2026 annual return by completing the ‘Status Change’ section. The ‘Status Change’ section in both the annual and final return form look similar to this. Depending on the type of status change, there may be additional information requested. For example, if you are becoming a group member, you will be required to inform us who your designated group employer is.

Let’s look at an example of a status change. In this example, Green Proprietary Limited is changing from a DGE to a group member of a different group on the 1st of February 2026 and have lodged their final return within 21 days of the change occurring.

The final return reconciles their wages for the period from the 1st of July 2025 to the 31st of January 2026 as the DGE. Because they were a DGE, they were also required to lodge a mental health levy final return to reconcile the levy for the group for the period they were the DGE. As Green Proprietary Limited stopped being the DGE for the group, another entity may need to nominate to become the DGE of that group from the 1st of February 2026.

From the 1st of February 2026, Green Proprietary Limited was a group member of a different group. As such, in the 2026 annual return, they will be reconciling their wages from the 1st of February 2026 to the 30th of June 2026 under their new employer status of ‘group member’. They will need to report their Queensland taxable wages, interstate wages and mental health levy payable to the DGE of their new group for this period, so that their new DGE can provide these figures in their 2026 annual return.

In the third phase of this video, we will discuss the lodgement of the annual return. In this section, we will cover topics such as:

• the nexus provisions
• Queensland taxable and non-taxable wages
• the regional employer discount
• deductions
• rates
• and
• the mental health levy.

To skip forward to the parts which are relevant to you, you can refer to the timestamps in the description below.​

A common question which pops up around annual return time is whether wages or payments should be declared when they are paid, or when they are due to be paid or payable. According to the Payroll Tax Act, the answer is the earliest of the two. For example, employees may perform work in June, but due to the accounts of their payroll system, may only get paid in July. In this instance, the wages should be declared in the annual return as they would be considered June wages (June being the month the work was payable).

Before you start declaring your taxable wages, it is also worth checking whether the wages should be declared here in Queensland. If you have employees who work in 2 or more states or territories in Australia, the nexus rules will help you determine which state or territory payroll tax is payable to.

The main determining factor will be where the work or service is performed. If workers are performing their duties wholly in one jurisdiction in a month, that is where payroll tax is paid. So, the first rule is pay payroll tax in the state or territory where the work is wholly performed.

Where things can get complex is when you have workers performing their duties across 2 or more jurisdictions in a calendar month. If this is the case, the nexus provisions provide a 4-tiered test to make a determination. The 4-tiered test is on our website and prescribed by legislation. The test works by starting at the first tier and working through until the fourth tier. If you can reach a determination at the first tier, you do not need to work through tiers 2, 3 or 4. You exit the test as soon as you can make a decision about where payroll tax is payable.

If you have a worker who has been employed in another country for a continuous period of more than 6 months, those wages are not taxable for payroll tax in Queensland. For more information about the nexus provisions, you can read Public Ruling PTA039.1—Payroll tax nexus provisions. The link is provided in the description below.

To help simplify the nexus provisions, we have an interactive help guide on our website. You will be asked questions in line with the 4-tiered test to help make a determination about whether the wages are taxable here in Queensland.

Now that we’ve discussed how to determine if the wages are taxable in Queensland for the annual return, we will look at which category they must be included in.

Unlike periodic returns, where you are required to declare a lump sum of Queensland taxable wages, the annual return requires you to break down the wages into 10 separate categories. These 10 categories will be automatically added together once you have input all of your individual wages to form your total Queensland taxable wages.

Any wages you list in the ‘Gross Salary and Wages’ field should not be included again in any other category field. For example, you should not declare superannuation payments in both the ‘Superannuation’ field and the ‘Gross salary and wages’ field, as this would lead to a duplication in the ‘Total Queensland taxable wages’ field.

It is important to note, in the Queensland taxable wages section where the categories are broken down, you should only declare taxable wages for one business with a single ABN. If you are a DGE, do not include wages of any of your group members in this section. Instead, a ‘Group wages’ section will appear later in the form, where you can enter the total Queensland taxable and interstate wages for the entire group. The entire group’s wages means your wages as the DGE plus the combined total of each of your group members’ wages.

For the interstate wages for all group members, this should also include any interstate group members which do not employ in Queensland.

We are now going to delve briefly into the 10 different categories of wages.

The first category which will display in the annual return form is ‘Gross salary and wages’. These are generally taxable payments which don’t fall into the other categories and may include annual leave, sick leave and long service leave, for example. You should declare the total amount before any deductions—such as PAYG income tax—have been applied.

As mentioned a little earlier, any wages you declare as gross salary and wages should not be declared in any other category.

Allowances

Most allowances are taxable. Examples may include tool allowances, meal allowances, height allowances and first aid allowances. The accommodation allowance and motor vehicle allowance have an exempt-from-payroll-tax component. Payments on these allowances are only taxable on the amount paid over the exempt amount.

An accommodation allowance is usually paid to an employee if they must spend a night away for business. For the 2026 financial year, it is taxable on any amount over $323 per night. So, if the accommodation comes to $350 for one night, the allowance is exempt for $323, and you should only declare $27 for this allowance.

The accommodation allowance can also include meals and incidentals. However, if only a meals and incidentals allowance is paid to an employee, a different exempt rate may apply. This is a daily rate which is pre-defined by the Australian Tax Office, and is $140.50 for meals and $24.50 for incidentals for the 2026 financial year.

A motor vehicle allowance is taxable over an amount of 88 cents per kilometre when an employee travels for business purposes in their own car. This rate applies to all cars, including electric and hybrid vehicles.

A note about the living-away-from-home allowance—even though it is called an allowance, you shouldn’t include this in the allowances section of your return. It is treated as a fringe benefit for payroll tax purposes.

Bonuses, commissions and director fees

Bonuses and commissions are taxable for payroll tax and include things like performance and Christmas bonuses paid to employees. Commissions should be included in returns for the period in which the sale is settled or when the commission is paid. This is an instance of the paid or payable scenario we discussed earlier.

Directors’ fees are taxable whether they are paid to a working or a non-working director, and it does not matter where the fees are paid to (for example, to a director’s trust).

Superannuation

A superannuation contribution is any contribution paid or payable by an employer to a superannuation fund on behalf of an employee or director. Superannuation contributions can be monetary (such as cash payments or electronic transfers) or non-monetary, such as marketable securities, properties or the forgiveness of a loan.

Super guarantee and pre-tax superannuation contributions are all taxable. These should be declared in the ‘Superannuation’ field of the annual return.

Salary sacrifice for fringe benefits (for example, a car under a novated lease, payment of school fees or child-care costs) is taxable for payroll tax and you should declare them in the ‘Fringe benefits’ field of the return. We should note that exempt benefits—such as a work laptop or tablet—are not taxable for payroll tax.

Fringe benefits are defined under the Fringe Benefits Tax Assessment Act 1986, which we’ll refer to as the FBTA Act moving forward.

For payroll tax purposes, any fringe benefit exempt under the FBTA Act is also exempt from payroll tax. Exempt fringe benefits include car parking benefits and certain types of entertainment benefits, known as tax-exempt body entertainment fringe benefits.

Fringe benefits are divided into Type 1 and Type 2 in the FBTA Act. In the annual return, you must declare the Type 2 grossed-up value of fringe benefits. You should also make sure that any fringe benefit which relates to Queensland is apportioned to Queensland.

Here is an example of the fringe benefit calculation for the payroll tax annual return.

In this example, a company called Blue Proprietary Limited declared Type 1 and Type 2 fringe benefits tax in their last fringe benefits tax return, which was for the period ending 31 March 2026. The aggregated Type 1 and Type 2 amount was $65,000.

This aggregated amount then needs to be grossed up by the Type 2 gross up factor of 1.8868 to get the fringe benefits tax amount for the 2026 annual return. In this example, the aggregated amount of $65,000 is multiplied by 1.8868, so that the fringe benefits tax amount which will need to be declared in the 2026 annual return is $122,642.

Public Ruling PTA003.5—Fringe Benefits has more information on declaring fringe benefits for payroll tax purposes. You can find the link to the public ruling in the description below.

We will now look at how you can apportion your fringe benefits for Queensland.

If you employ in more than one state or territory, it may not be possible for you to identify state-specific elements of fringe benefits. We find that this is an area where people often over-declare. In these circumstances, the fringe benefit amount may be declared on an apportionment basis, calculated using the ratio of wages paid in particular states or territories.

For example, imagine we have a company which pays $2 million in annual wages in Australia. They pay $1.5 million in annual wages in Queensland and $500,000 in annual wages in South Australia. As you can see in the second pie chart, this equates to 75% of wages being paid in Queensland and 25% in South Australia. Based on the wages ratio, 75% of the fringe benefit may be declared in Queensland and 25% in South Australia.

Termination Payments

When an employee stops working, most additional amounts paid to them are taxable. Termination payments include:

• unused annual leave, long service leave or sick leave
• deferred or accrued wages
• commissions
• bonuses
• and
• death benefit payments.

It’s important to note that any termination payments that are genuine redundancy payments or early retirement schemes are generally exempt from payroll tax to the extent they are exempt from income tax. The best rule to apply for any type of termination payments is that if the employee does not pay income tax on the termination payment, then you do not have to pay payroll tax on it.

Now we’ll discuss contractors.

Even though payments to contractors are not captured under the general definition of wages in the Payroll Tax Act, there are special provisions in the Act which can deem contractor payments to be considered as taxable wages.

The first thing you should consider is if the person performing the work is actually an employee. Public Ruling PTA038.2—Determining whether a worker is an employee will assist you in this. Once again, you can find the link to the public ruling in the description below.

If the worker is deemed to be an employee, then payroll tax applies and payments made to the worker are captured under taxable wages.

If they are not an employee and are deemed to be a contractor, you should consider whether the person is engaged under a relevant contract and if there is a service component in the contract.

If a relevant contract does not exist, no payroll tax applies.

If a relevant contract does exist, you must consider whether 1 of the 9 exemptions apply. Our website outlines each of the 9 exemptions and includes helpful examples.

If none of the exemptions apply, the wages are subject to payroll tax. However, a partial deduction can be applied for the non-labour components, such as goods or materials. Additionally, GST can be excluded from the taxable wages. See our website for more information regarding deductions which are available.

If an exemption applies, payments are not subject to payroll tax. If exempt, these wages should be declared in the ‘Non-taxable wages’ section of your return, under ‘Other wages’.

If you would like further assistance on contractors, there is an interactive help guide on our website. You will be asked questions in line with the legislation to help you reach a determination on whether payments to contractors are taxable in Queensland.

Shares and options

If shares and options have been granted to employees, contractors or company directors, they are taxable for payroll tax.

Shares and options not defined as an employee share scheme interest under the Income Tax Assessment Act 1997 (which we’ll refer to as the ITA Act from now on) may be a fringe benefit and may need to be included as fringe benefits in the annual return.

The value of any shares and options must be declared in the return for the period in which the relevant day falls. Wages comprising the grant of a share or option are taken to be paid or payable on the relevant day. You can choose either the grant day or the vesting day. The value for shares and options is either the market value on the relevant day you have chosen, or the value defined under the ITA Act.

If the value is not declared in the return period which includes the grant day, then the relevant day is automatically chosen to be the vesting day or—if it is not vested—then it will be 7 years after the date the share is granted.

After you have entered in your Queensland taxable wages, you will be asked if you are a regional employer. To be considered a regional employer, your principal place of employment must be in regional Queensland and you must pay at least 85% of your Queensland taxable wages to regional employees.

Additionally, a regional employer is not entitled to a discount if they pay over $350 million in annual wages, or a pro-rata rate for a periodic or final return period.

Let’s break down the eligibility criteria.

Firstly, your principal place of employment is your registered business address as per the Australian Business Register, which we’ll refer to as the ABR. If you do not have an ABN, it is the place in which your principal place of business is located. This principal place of employment must be located in one of the areas specified in the definition of regional Queensland.

The ABR’s website displays your business postcode. Note that to qualify for the discount, the postcode must be located in regional Queensland and be current as per the ABR at the time of lodging. If you are claiming the discount for a prior period, you will need to have a regional postcode which has been backdated to the period for which you are lodging.

Regional Queensland is defined as the following areas, as identified by the Australian Bureau of Statistics 2021 Statistical Area 4 (SA4) map. They include:

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

Secondly, a regional employee is an employee whose principal place of residence is in Regional Queensland.

All eligibility criteria must be met in order to receive the 1% discount on the payroll tax rate.

To check whether you qualify for the regional employer discount, you can use the SA4 Statistical map which is linked on our website. Once in the map, you can filter for the SA4 statistical area as shown on the slide. Then, enter the business’s registered postcode into the search bar and click on the search icon. Zooming out, we can see the map is divided into SA4 statistical areas as outlined in red. When you click anywhere within the SA4 area of which the map has pinpointed, it will display the name of the area. The name must match one of the areas previously mentioned as being in regional Queensland to claim the regional employer discount.

If you select Yes to the regional employer question in the annual return form, the discounted rate will be applied automatically. You will also be asked to confirm you meet the eligibility criteria.

The next stage of the return will be the non-taxable wages. There are some wages which are exempt from payroll tax in Queensland, such as GST and paid parental leave. As these wages are considered non-taxable, they should be declared in the ‘Queensland non-taxable wages’ section of the annual return. If they are included in the Queensland taxable wages section in one of the categories, then payroll tax will be calculated on them.

In the annual return form, there are also two separate fields for apprentice and trainee wages. Wages paid to apprentices and trainees may be exempt from payroll tax. To be regarded as an apprentice or trainee for payroll tax purposes, the employee must sign a relevant training contract with their employer to undertake an apprenticeship or traineeship, as declared under the Further Education and Training Act 2014.

If apprentice and trainee wages are determined to be non-taxable, a payroll tax rebate for the 2026 financial year may be applicable. This will automatically calculate in the form after you enter the apprentice and trainee wages.

We’ll now look at some other types of exempt wages.

Parental, adoption and surrogacy leave is exempt from payroll tax for up to 14 weeks at full pay. However, this can be taken over a longer period; for example, 28 weeks at half pay. The Australian Government’s paid parental leave scheme payments are not taxable.

Wages paid to employees performing certain volunteer work are also exempt from payroll tax. For example, wages paid to honorary ambulance officers may be exempt from payroll tax. Wages paid to an employee performing as a rural fire service or State Emergency Service volunteer are also exempt when you have a certification from a brigade leader.

To claim this exemption, the employee must be receiving normal pay while performing these volunteer activities. If the employee was on annual leave while volunteering with the SES or working as an honorary ambulance officer, the exemption would not be available.

Wages paid to an employee on military leave may be exempt from payroll tax. If you have an employee who is away from work either serving in or training for the Army Reserve, payments you make to them while they are performing this function are not taxable for payroll tax.

After declaring your Queensland taxable and non-taxable wages and interstate wages for your business or group of businesses, you will need to reconcile the mental health levy. The levy was announced in the 2022-23 State Budget by the Treasurer. The proceeds of the levy are dedicated to support state-run mental health services.

Your Australian taxable wages determine your mental health levy threshold bracket, but it is important to note that the levy will only be applied to your Queensland taxable wages which exceed the threshold. If you pay any wages which are exempt from payroll tax, these wages will not be subject to the mental health levy.

For the 2026 financial year, employers or groups of employers whose total Australian taxable wages are below $10 million will not be liable for the mental health levy.

For employers or groups of employers whose total Australian taxable wages are above $10 million (which is the primary threshold), the primary levy rate of 0.25% will be applied to Queensland taxable wages above $10 million.

Additionally, for employers or groups of employers whose Australian taxable wages are above $100 million (which is the additional threshold), the additional levy rate of 0.5% will be applied to Queensland taxable wages above $100 million. It is worth mentioning that the additional levy rate does not replace the primary levy rate. So, for example, if your Australian taxable wages are $125 million for the 2026 financial year, the primary levy rate of 0.25% would be applied to your Queensland taxable wages above $10 million. The additional levy rate of 0.5% would be applied in addition to your Queensland taxable wages above $100 million. This means that effectively, your Queensland taxable wages above $100 million would be taxed at a combined rate of 0.75%.

Here we can see how the mental health levy will display in QRO Online for a DGE. It may look different for other employer statuses, noting that group members will not be required to reconcile the mental health levy in their annual return. Instead, they are required to provide their DGE with their periodic mental health levy liabilities assessed for the time they were a member of the group.

For most entities, the start and end date will match the start and end date at the beginning of your return form. However, if you are a DGE and one of your group members have had a change of employer status within the 2026 financial year, the dates may be different. It is important that you only declare wages for the period displayed in the form.

In the ‘Levy calculation’ section, you will see your threshold amounts, wages and any applicable mental health levy calculated for the full period of the return.

A common question we are asked is why the primary and additional thresholds may have amounts different to $10 million and $100 million. It is important to mention that if you are a member of a group, pay interstate wages or are liable for only part of the financial year, the thresholds of $10 million and $100 million are adjusted accordingly.

After entering your Queensland taxable and interstate wages, your primary and additional thresholds will display and your mental health levy amount will be automatically calculated. If you are a DGE, you must obtain the periodic levy amounts from your group members to reconcile the levy correctly.

Group members can go to the ‘Year-to-date returns’ tab in QRO Online to view their mental health levy assessed for the year, to be provided to the DGE. The DGE is liable to pay any shortfall or will be entitled to be credited for any overpayment, on behalf of the group.

As June wages (for monthly lodgers) and January to June wages (for half-yearly lodgers) are included in the annual return and not in a separate periodic return, mental health levy amounts applicable for these periods are also reconciled in the annual return of a non-grouped employer or DGE.

There are four payroll tax rates in Queensland which can apply when you lodge your returns.

For employers or groups of employers with combined Australian taxable wages of $6.5 million or less, the payroll tax rate is 4.75% on all Queensland taxable wages.

For employers or groups of employers with combined Australian taxable wages above $6.5 million, the payroll tax rate is 4.95% on all Queensland taxable wages.

Remember, while your total Australian taxable wages determine the payroll tax rate which will apply, you are only taxed on your Queensland taxable wages.

From the 1st of July 2019 to the 30th of June 2030, regional employers may also be entitled to a 1% discount on the payroll tax rate. To determine whether you are a regional employer, please refer to the description below and click on the link to the regional employer discount timestamp.

The payroll tax deduction

For the 2026 financial year, you are entitled to a payroll tax deduction if you pay between $1.3 million and $10.4 million in Australian taxable wages.

The deduction reduces by $1 for every $7 of Australian taxable wages you pay over the $1.3 million threshold. Where you pay wages outside of Queensland, the deduction is apportioned. Also, if your annual return period is for less than a full financial year, a pro-rata calculation of the threshold and deduction apply.

For members of a group, the DGE claims any deduction entitlement on behalf of the group. The deduction is calculated on the combined Australian taxable wages for the entire group.

If the annual return deduction is greater than the DGE’s taxable wages, the DGE can nominate other members of their group to receive any excess deduction in their annual return. Applying the excess deduction is a manual process completed by our office. Group members are still required to lodge and pay for their annual return, even if they are expecting an excess deduction from their DGE. Interest and penalty tax may be applied if the liability is not paid in full. If an excess deduction is applied after payment has been received, you will be credited for the payment.

Now that we have covered the main concepts to understand when completing your 2026 annual return, let’s look at the final section of the form.

• The ‘Liabilities’ section shows the calculated tax and total amounts payable.
• The ‘Queensland taxable wages’ field is the total of the taxable wages entered into the ‘Queensland taxable wages’ section for the individual business. This is not the total group’s Queensland wages.
• The ‘Less deduction’ field is the annual deduction you are entitled to, based on the wages you’ve supplied. This was covered in the previous slide. If you are a DGE and your individual Queensland taxable wages are less than the deduction, there will be no amount payable and you will be asked to give an excess deduction to your group members.
• The ‘Taxable amount’ is your individual Queensland taxable wages, minus your deduction entitlement.
• The ‘Calculated tax’ is the payroll tax liability, before any rebates are deducted (such as the apprentice and trainee rebate). This is calculated by applying the payroll tax rate to the ‘Taxable amount’.
• The ‘Less rebates’ field is the amount of rebates you are entitled to.
• The ‘Payroll tax amount’ is the payroll tax liability for the year, after any rebates are deducted
• The ‘Less total periodic amounts’ field is the combined payroll tax liability of your periodic returns for the financial year. It does not include interest, penalty tax or mental health levy amounts. The breakdown of the amount can be found in the ‘Year-to-date returns’ tab in QRO Online.
• The ‘Payroll tax liability/credit’ is the final payroll tax liability owing. This is the payroll tax amount, minus the total periodic amounts.

Then we move on to the mental health levy amounts.

The ‘Mental health levy liability/credit’ amount is the final liability or credit amount for the financial year after the periodic mental health levy amounts have been reconciled. Unpaid tax interest will be applied and displayed under this line if full payment is not received by the due date.

The ‘Payments/credits received’ field is the amount of payments or credits which have been received against the specific transaction number of the return.

And finally, the ‘Total amount payable’ is the combination of the payroll tax liabilities and credits, the mental health levy liabilities and credits, and any unpaid tax interest applied. This is your final amount payable.

If your total payable amount is a negative number, the return has resulted in a credit. If this is the case, you will be asked if you would like a refund paid into your bank account. If you indicate Yes, you will be asked to provide or confirm your bank account details. If you have bank account details stored in QRO Online, they will pre-populate in the form. These details can be found in the ‘Manage details’ tab in QRO Online.

If your annual return results in a credit, it will be reviewed by our office before a refund can be issued.

If you are unable to submit your annual return, you should check whether there are any errors. Errors will appear as an exclamation mark in the top right corner of the screen. You can click on an error to elaborate on which field may be missing.

If you are unable to resolve the error, please call our office on 1300 300 734 and we will assist you with troubleshooting your return.

Now, we will go through the final section of this video and discuss what happens after you lodge your annual return. Once again, to skip to the part which is relevant to you, please refer to the timestamps in the description below.

When you have successfully submitted your annual return, a pop-up window will confirm the return has been successfully submitted. It will have the transaction number for the form, which will be your reference for payments. After you have submitted your return, the return will disappear from the ‘Returns’ tab in QRO Online and move to the ‘Payments’ tab.

There are several ways you can make a payment for the annual return lodgement. If you have bank account details recorded in QRO Online, you can make direct debit payments by selecting the Pay button, which appears next to the liability. For detailed information on the other payment options—such as BPAY, electronic funds transfer and cheque—select the View Details button in the far right-hand column.

If you use an incorrect transaction number as a reference when making a payment outside of QRO Online, it is important that you contact us to ensure the payment is allocated correctly in your account. If this occurs, send a request to the email address shown on screen.

If you would like to view your annual return after it has been lodged, you can do a historical search via the ‘Returns’ tab in QRO Online. To do this, select the Advanced Filter icon, located next to the search bar. This icon looks like a funnel with an addition sign.

You will then be able to apply additional criteria to your search. We recommend only applying one filter at a time. For example, you can use the financial year filter to select the relevant financial year, and click on the Search button to view your return.

When your return displays, you can either view your form or request a reassessment if an error has been made. Note that the ‘Request for reassessment’ function is disabled from early June until after the annual return due date; no ‘request for reassessment’ button will display during this period. So, if you have made an error in your annual return prior to the due date, please call our office on 1300 300 734 for assistance.

If you want to use this function after the due date, you will be asked to provide a reason for the reassessment request and add a comment to support the reassessment. We recommend you provide as much detail as possible as to the facts and circumstances regarding the reassessment. If there is any interest or penalty tax applied to your reassessment, we would also recommend you provide reasoning in the comments box if you are requesting remission. See the public rulings displayed on screen for the factors taken into consideration when determining whether remission of interest and penalties will be granted.

Under tax administration laws, interest and penalty tax may apply when tax is not paid on time or has been underassessed. If a return has not been lodged or paid on time, interest will accrue on a daily basis until the liability and all interest and penalty tax has been paid in full.

The unpaid tax interest rate is noted on our website and is reviewed annually.

Unpaid tax interest has two components:

• assessed interest, which is calculated at the time an assessment is made if it has been lodged late, and will be reflected in your return
• and
• late payment interest, which accrues daily and applies on a Sunday if an assessment is made but remains unpaid. This will be reflected in the payments section of your QRO Online account for the return.

To avoid paying unpaid tax interest, pay your liability on time.

If a lodgement is not received by the due date, our office may raise a default assessment. When a default assessment is made by the office, penalty tax of 75% of the payroll tax liability is applied.

Under the legislation, when a payment is received, it is automatically applied to any penalty tax first and then interest, before being applied to any mental health levy liabilities, followed by any primary tax. Interest will continue to accrue until the primary liability has been paid in full.

If you have any interest or penalty tax applied to your return, you can send a request to our office via email for consideration to have this remitted. Please note, remission of interest and penalty tax must be made in accordance with the public rulings displayed on screen.

Now that we’re nearing the end of this video, let’s review the main points.

You will need to confirm that there is an individual linked to the registered payroll tax entity in QRO Online. If you are successfully linked, you will see the ‘View accounts’ tile in your QRO Online homepage.

If you are a member of a group, ensure you’ve provided the relevant information to your group members or DGE. If you are a group member, you must provide your DGE with your 2026 financial year Queensland taxable, non-taxable and interstate wages, along with your estimated wages for the 2027 financial year and your periodic mental health levy liability amounts.

Make sure you check that your employer status is correct prior to lodgement. If it is incorrect, ensure you lodge a final return prior to lodging your annual return to ensure that our office has time to manually review your final return before the due date.

And finally, the most important point to remember, is the due date of the 21st of July. Late lodgement and/or payment may result in penalty tax and interest.

If you would like more information on any of the topics discussed in this video, you can visit our website at qro.qld.gov.au or click on the links in the description below to review any of the topics we’ve covered. We also run live webinar sessions in the lead up to the due date for the annual return. If you’d like more information and to sign up for a payroll tax webinar, see the description below.

And lastly, you can get in touch with our office by phone or email to discuss lodgement of your annual return. Our contact details are listed here on the screen. Please keep in mind that as we approach the due date for the return, there may be some delays.

That brings us to the end of today’s video. Thank you for taking the time to learn about the payroll tax annual return lodgement process here in Queensland. We hope you have found this presentation useful.