What counts as wages for payroll tax purposes in Australia

Payroll tax is charged on wages, and the definition of wages is much wider than a base salary line on a payslip. Most businesses that get caught out weren’t hiding anything — they just didn’t realise a particular payment type counted, or assumed a rule that applies in one state applies everywhere.

What’s included, in every state

NSW, VIC and QLD payroll tax law shares a common origin — states harmonised the core structure of their payroll tax legislation between 2007 and 2009, and continue to align key administrative areas. In all three states, taxable wages include:

• Salary and ordinary wages, including leave payments and leave loading
• Allowances (meal, travel, tool, uniform and similar)
• Bonuses and commissions
• Overtime payments
• Directors’ fees — even for a non-executive director who doesn’t work day to day
• Superannuation contributions, including salary-sacrificed super
• Fringe benefits (with some specific carve-outs — see below)
• Termination payments, including unused leave paid out and some ex gratia payments
• Shares and options provided to employees as part of their pay
• Contractor payments, unless a specific exemption applies (see our separate guide to contractor exemptions)

Sources: Revenue NSW, SRO Victoria, Queensland Revenue Office.

A worked example: what a payroll tax wage figure actually adds up to

Take a hypothetical full-time employee on a base salary of $95,000. A business owner estimating payroll tax off the salary figure alone would be working from the wrong number. The taxable wage figure for that one employee, in a typical year, is closer to the sum of every payment type above that actually applies to them — for example, base salary plus the compulsory superannuation contribution on top, plus any car allowance, plus any bonus paid in that financial year, plus the value of any fringe benefit like a novated lease arrangement. None of these figures are official rates — they’re illustrative — but the mechanism is real: payroll tax is assessed on the whole remuneration package, not the number on an offer letter. A business with fifty employees on this kind of package can easily be understating its taxable wage base by a meaningful margin if allowances and super are left out of the calculation.

The same logic applies at the other end of the business — directors. A company with two working directors and one non-executive director who attends board meetings but has no day-to-day role still needs to include that non-executive director’s fees in taxable wages. It’s a small line item individually, but it’s exactly the kind of payment that gets left off a payroll tax working sheet because it doesn’t come through the ordinary payroll run.

What’s excluded — and where the states genuinely differ

“Harmonised” doesn’t mean identical. The states agree on the broad shape of what counts as wages but differ on specific exemptions, and one difference trips people up more than any other: apprentice and trainee wages.

• QLD genuinely exempts apprentice and trainee wages paid under a registered training contract declared under the Further Education and Training Act 2014, and layers a further 50% rebate on top (running to 30 June 2027).
• NSW does not exempt apprentice and trainee wages — they’re fully taxable, but eligible employers approved by Training Services NSW can claim a rebate that offsets the tax on those wages. The wages still count toward your total taxable wage figure; the rebate reduces the liability afterwards, which is a different mechanism from an exemption even though the net cost can look similar.
• VIC taxes apprentice and trainee wages by default too, unless they’re employed through a Treasurer-recognised Group Training Organisation, or fall under the re-employed apprentice/trainee exemption.

Other exclusions are more state-specific still. VIC excludes employer-paid parental leave (up to 14 weeks), portable long-service-leave scheme contributions, redundancy scheme contributions, WorkCover and TAC payments, and certain vehicle/accommodation allowances and expense reimbursements — VIC specifically distinguishes a genuine reimbursement (excluded from wages entirely) from an allowance (generally included). QLD excludes genuine redundancy payments (the income-tax-free portion), government-funded parental leave, workers’ compensation payments, car parking fringe benefits, and wages paid by government departments, public hospitals and registered charities, subject to conditions. NSW’s main structural exemption outside apprentices is for Group Training Organisation wages — a GTO approved under the relevant training services legislation can have its own staff and its apprentices’ wages exempted, reflecting the GTO’s role as a pass-through employer rather than the end user of the labour.

Common mistakes business owners make here

• Estimating off base salary only. Leaving out super, allowances and bonuses is the single most common way a payroll tax estimate comes in low.
• Assuming apprentice wages are exempt everywhere. That’s true in QLD, not in NSW or VIC — a business operating in more than one state needs to apply the right treatment per state, not one blanket assumption.
• Treating every allowance the same as a reimbursement. An allowance (a fixed payment regardless of actual expense) is usually taxable; a genuine reimbursement of an actual cost incurred can be treated differently. Conflating the two is an easy way to misclassify a payment type.
• Forgetting non-working directors. Director fees are wages regardless of how involved that director is in daily operations.
• Assuming employee share scheme treatment is identical across states. The general principle — that shares and options provided as remuneration are wages — is consistent, but the precise timing and valuation rules carry technical detail that can differ. If equity is a meaningful part of how you pay people, this is one area worth a specific check with your accountant rather than relying on a general guide like this one.

How this compares across NSW, VIC and QLD

The inclusion list — salary, allowances, bonuses, super, fringe benefits, termination payments, director fees, shares and options — is genuinely consistent across all three states, which is a direct result of the 2007–2009 harmonisation process. Where the states diverge is almost entirely in the exemptions layered on top of that common base: apprentice and trainee treatment (exempt in QLD, rebated in NSW, conditionally taxable in VIC), and a long tail of narrower state-specific carve-outs for things like parental leave schemes, emergency-service volunteering, and government or charity employment. If you’re only operating in one state, the exemption list is what to focus on. If you’re paying wages across state lines, don’t assume an exemption you rely on in one state travels with you to the next — check each state’s list separately.

What to do next

1. Pull your actual gross wage figures per state, including super, allowances, bonuses and any fringe benefits — not just base salary.
2. Check whether any apprentices or trainees on your payroll qualify for an exemption or rebate in the state they’re employed in, since the treatment genuinely differs by state.
3. If you pay non-executive directors, confirm their fees are included in your wage figures.
4. Run your corrected, full gross figures through the comparison calculator to get an accurate estimate across NSW, VIC and QLD.
5. If shares, options or another equity component are part of how you pay staff, get specific advice on the valuation and timing rules that apply, rather than assuming the general inclusion principle covers the detail.