Payroll tax (builder)
Payroll tax is a state tax on wages above a threshold. Builders hit it via subbie payments deemed wages and grouping. State thresholds and rates for 2025-26.
Ask Chalkline about this →Payroll tax is a state and territory tax on an employer’s total Australian taxable wages above a threshold. Each state sets its own threshold and rate, and a builder’s “wages” for this tax include more than salaries, which is why builders hit it sooner than they expect.
Thresholds and rates (2025-26)
| State | Annual threshold | Rate |
|---|---|---|
| NSW | $1.2M | 5.45% |
| VIC | $900K | 4.85% |
| QLD | $1.3M | 4.75% (4.95% over $6.5M) |
| WA | $1M | 5.5% |
| SA | $1.5M | 4.95% |
(Verified 2026-05-25; thresholds and rates change, confirm with the state revenue office.)
What counts as wages
Taxable wages are not just salaries. They include superannuation, allowances, fringe benefits, and certain contractor payments, which is the part that catches builders.
The traps for builders
- Deemed contractors. Payments to subbies can be deemed wages for payroll tax under the contractor provisions, even where the subbie is a genuine contractor for other purposes. A builder paying a lot of labour through subbies can cross the threshold without a large PAYE payroll.
- Grouping. Related entities (companies under common control, shared employees) are grouped and share one threshold. You cannot split wages across two companies to stay under the line.
- Interstate apportionment. If you pay wages in more than one state, each state’s threshold is reduced proportionally to your wages there.
- Apprentice concessions. Several states offer rebates or exemptions for apprentice and trainee wages, worth claiming.
For a builder
- Count subbies in. The deemed-contractor rules mean subcontractor payments may be taxable; this is the single most common payroll-tax surprise in building.
- Mind grouping if you have multiple entities. A trust-plus-company or multi-company structure is likely grouped.
- Get advice at the threshold. As your wages-plus-deemed-contractor total nears the state threshold, the deemed-contractor and grouping rules are complex enough to warrant a payroll-tax-aware accountant.
Also known as: payroll tax.
Related
See also
Last updated: 2026-05-25. Verified: 2026-05-25. Quarterly review for currency.