Victorian payroll tax applies if you pay wages in Victoria and your Australian wages - your Victorian wages plus your interstate wages - exceed the Victorian monthly threshold.
Interstate wages are any wages liable for payroll tax under the legislation of another state or territory. Employers or groups of employers that pay interstate wages as well as Victorian wages can’t claim the full payroll tax threshold in Victoria. Instead, the threshold is reduced based on the ratio of the total Victorian taxable wages to total Australian taxable wages. This means the employer deducts part of, rather than the whole, Victorian threshold amount.
The monthly threshold is calculated based on the estimated Victorian and Australian wages. Estimates are provided by the employer in the prior year’s annual reconciliation or at the time of registration.
The annual threshold is calculated based on the actual Victorian and Australian wages declared in the annual reconciliation return.
You should make sure that all wage items, such as superannuation, contractors and allowances, are included.
If your business is grouped and you are the designated group employer, you must include the taxable wages of all group members when calculating the threshold.
If a worker works in multiple states during a month, you can determine where the wages should be reported for that month by following our nexus provisions.
How to calculate your deduction amount
Example 1 – Non-grouped employer paying interstate wages
Red Pty Ltd provided estimates of its 2021-22 wages in the prior year’s annual reconciliation as:
- Victoria $400,000
- New South Wales $300,000
- Queensland $100,000
- Total $800,000
The monthly deduction is calculated:
$58,333 (monthly threshold) × $400,000 ÷ $800,000 = $29,166
If the gross taxable Victorian wages for Red Pty Ltd for October 2020 were $35,000, the tax payable would be:
($35,000 - $29,166) × 4.85%* = $282.95
*Lower rates apply in regional Victoria
Example 2 – Grouped employer paying interstate wages
Green Pty Ltd is grouped with Blue Pty Ltd (the group) and employs in Victoria and Queensland. Blue Pty Ltd only employs in Queensland.
Green Pty Ltd provides estimates of the group’s Victorian and Queensland wages for 2021-22 in the prior year’s annual reconciliation as:
- Victoria $1 million
- Queensland $5 million
- Total group Australian wages are $6 million
The monthly deduction is calculated:
$58,333 (monthly threshold) × $1,000,000 ÷ $6,000,000 = $9722
If the gross taxable Victorian wages for Green Pty Ltd for October 2020 were $35,000, the tax payable for that month would be:
($35,000 - $9722) × 4.85%* = $1226
*Lower rates apply in regional Victoria
Note: In the annual reconciliation return, all employers recalculate the full year’s deduction based on actual Victorian and Australian taxable wages. The annual reconciliation is completed electronically and can be accessed from mid-June via PTX Express.
