Payroll tax deductions
A deduction may be available if your total annual Australian taxable wages are less than $10.4 million.
For annual Australian taxable wages over the $1.3 million threshold, the deduction reduces 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.
For example, the maximum monthly deduction is $108,333 and is reduced by $1 for every $7 of monthly wages over this amount. The deduction reduces to zero when monthly wages reach $866,666.
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 $10.4 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.
For the financial year ended 30 June 2023, your annual and final deduction amounts may be based on 2 different deduction calculations. This is because the deduction range changed from 1 January 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 | |
|---|---|---|
| Monthly | Yearly | |
| 1 January 2023 onwards | $108,333 to $866,666 | $1,300,000 to $10,400,000 |
| 1 July 2019 to 31 December 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:
|
Enter your deduction amount in the ‘Fixed periodic deduction’ field when you lodge your periodic return |
| Annual | At the end of the financial year | You are either:
|
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:
- are not in a group but pay interstate wages
- or
- you are a designated group employer.
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.
If you are designated group employer (DGE), taxable wages referenced in the example would be based on total group taxable wages.
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.
1 July 2022 to 30 June 2023
In this example, a non-grouped employer paid these wages for the financial year:
- Queensland taxable wages $2,500,000
- Australian taxable wages $5,000,000.
The example assumes wages were paid evenly throughout the financial year.
The deduction calculation splits the $1.3 million threshold across the 2 halves of the financial year based on the taxable wages paid in each half. It will be adjusted proportionally for part-year periods (due to a status change, for example) that are in both halves of the financial year.
The first formula calculates your deduction for the first half of the financial year, reducing your proportional threshold by $1 for every $4 of Australian taxable wages over this amount.
The second formula calculates your deduction for the second half of the financial year, reducing your proportional threshold by $1 for every $7 of Australian taxable wages over this amount.
To calculate your annual deduction for the 2022–23 financial year, add the results of both formulas. In this example, the total annual deduction is $286,607.
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.
Also consider…
- Read more about what type of return you need to lodge and when it is due.
- Learn about payroll tax exemptions.
- Find a payroll tax webinar or information session.