Payroll tax surcharges apply to employers and groups with Australian wages over $10 million.
There are payroll tax surcharges in addition to standard payroll tax. The 2 surcharges support key priorities in Victoria:
- The mental health and wellbeing surcharge funds improvements to our state’s mental health system. It was a recommendation of the Royal Commission into Victoria’s mental health system. It was introduced on 1 January 2022 and is ongoing.
- The COVID-19 debt temporary surcharge helps repay debt incurred during the pandemic. It began on 1 July 2023 and will apply until 30 June 2033:
Both surcharges are automatically calculated based on your Victorian taxable wages and included in your regular payroll tax returns.
Surcharge rates
The surcharges only apply to Victorian taxable wages above the relevant thresholds.
| Australian wages | Mental health surcharge | COVID-19 surcharge | Total surcharges |
|---|---|---|---|
| Over $10 million |
0.5% |
0.5% |
1% |
| Over $100 million |
Additional 0.5% |
Additional 0.5% |
2% |
Thresholds and who pays
You must pay the surcharges if:
- you pay Victorian taxable wages and
- your Australian wages exceed $10 million annually (or $833,333 monthly).
A higher rate applies if your Australian wages exceed $100 million annually (or $8,333,333 monthly).
If you are a member of a group, these thresholds apply at the group level and are claimed by the designated group employer (DGE).
The annual thresholds are adjusted proportionately if you:
- are an employer for less than the full financial year
- pay wages in other Australian states or territories.
Wages that are exempt from payroll tax are also exempt from the surcharges.
Part-year employers
If an employer operates for only part of the financial year, their annual surcharge thresholds are reduced proportionally based on how many days they employed during the year. These adjusted thresholds are then used to work out whether surcharges apply.
Example 1
Company A only employed staff from 1 July 2024 to 15 February 2025, which is 230 days out of the 365-day financial year.
To calculate their adjusted thresholds:
First threshold:
$10,000,000 × 230 ÷ 365 = $6,301,370
Second threshold:
$100,000,000 × 230 ÷ 365 = $63,013,699
Employers with interstate wages
If you pay wages in Victoria and interstate, your surcharge thresholds are adjusted based on the proportion of your Victorian wages to total Australian wages.
Annual thresholds are adjusted by the ratio of the total Victorian taxable wages to total Australian wages.
Example 2
Company B employed for the entire 2024-25 financial year and paid $80 million in wages in Victoria and $70 million in wages in New South Wales. Accordingly, the relevant annual thresholds are as follows:
First annual threshold:
$10,000,000 × ($80,000,000 ÷ ($80,000,000 + $70,000,000)) = $5,333,333.33
Second annual threshold:
$100,000,000 × ($80,000,000 ÷ ($80,000,000 + $70,000,000)) = $53,333,333.33
Monthly thresholds are adjusted by the ratio of the estimated annual Victorian taxable wages to estimated annual Australian wages.
Example 3
Company C estimated that in 2024-25 it would pay $50 million in wages in Victoria and $60 million in wages in New South Wales. Accordingly, the relevant monthly thresholds are as follows:
First monthly threshold:
$833,333 × ($50,000,000 ÷ ($50,000,000 + $60,000,000)) = $378,787.73
Second monthly threshold:
$8,333,333 × ($50,000,000 ÷ ($50,000,000 + $60,000,000)) = $3,787,877.27
Grouped employers
Thresholds apply at the group level, not the individual entity level.
The DGE is responsible for:
- calculating the group’s total Australian wages
- determining whether the group exceeds the $10 million or $100 million thresholds.
Each group member pays their share of the surcharge when they lodge their payroll tax return (monthly or annually).
Lodging and paying
Payroll tax surcharges are paid through PTX Express. The timing and responsibility for payment depend on your business structure. If you operate in multiple states and territories, your thresholds are adjusted before surcharge liability is calculated.
Payment requirements when lodging monthly
If your Australian wages, including those of any group you are part of, are under $10 million, you do not need to pay the surcharges on a monthly basis.
Victorian-only non-group employers
- Pay monthly if wages exceed $833,333.
- Pay additional surcharge if wages exceed $8,333,333.
Non-group employers with Victorian and interstate wages
Estimated Australian wages over $10 million:
- Pay monthly for any month where Victorian taxable wages exceed the adjusted first monthly threshold.
Estimated Australian wages over $100 million:
- Pay additional surcharges monthly for any month Victorian taxable wages exceed the adjusted second monthly threshold.
Groups with estimated Australian wages above $10 million
- DGE must pay monthly for any month when their own Victorian taxable wages exceed the relevant adjusted first monthly threshold.
- Ordinary members must pay monthly on all their Victorian taxable wages.
Groups with estimated Australian wages above $100 million
- DGE must pay additional surcharges monthly for any month when their own Victorian taxable wages exceed the relevant adjusted second monthly threshold.
- Ordinary members must pay additional surcharges monthly on all their own Victorian taxable wages.
Annual reconciliation
At the end of each financial year, all employers must complete an annual reconciliation.
For non-group employers:
- the surcharge payable on annual Victorian taxable wages is compared to payments made during the year
- any shortfall is payable, and any overpayment is refunded.
For group members:
- the surcharge payable is based on annual group Victorian taxable wages
- each member reconciles their share against payments made during the year
- any shortfall is payable, and any overpayment is refunded.
This process ensures the correct surcharge amount is paid and aligns with standard payroll tax reconciliation procedures.
