Workers' compensation and payroll tax
Find out what wages or compensation you need to pay tax on, if one of your employees is injured at work.
If one of your employees is injured at work, the wages or any compensation you pay while they are away from work are usually taxable.
When calculating your taxable wages, include these payments.
When you lodge your:
- periodic return, include these payments as part of your Queensland taxable wages
- annual return, enter these payments in the corresponding fields as part of your Queensland taxable wages.
WorkCover claims and accident pay
If you make a WorkCover claim, any amounts you pay an injured employee from the date of their injury onwards are taxable until the claim is approved. If WorkCover Queensland approves your claim, the original amount you paid your employee for the reimbursement period is no longer taxable. Wages you pay for the date of injury are still taxable.
Requesting a reassessment
If you paid payroll tax on wages after the date of an injury and your WorkCover claim is approved, you can request a reassessment. This must state the:
- amounts you included as taxable wages after the date of injury
- periods you paid these amounts.
Send your request to:
- Queensland Revenue Office
GPO Box 2248
BRISBANE QLD 4001 - or
- payrolltax@treasury.qld.gov.au.
Make up pay
If the compensation that WorkCover Queensland pays you is less than the wages you would normally pay the injured employee, any difference that you pay—’make up’ pay—is taxable.
Read the public ruling on workers’ compensation payments (PTA015).
Non-taxable compensation payments
Non-taxable compensation payments include compulsory:
- excess from WorkCover Queensland payments
- payments insuring against accidental, work-related injuries.
When you lodge your annual return, enter non-taxable compensation payments in the ‘Other non-taxable payments’ field as part of your Queensland non-taxable wages.