NSW payroll tax: thresholds, rates and Revenue NSW lodgement

What counts as taxable wages in NSW

Taxable wages in NSW include salaries and wages paid (including bonuses, commissions, and termination payments), the grossed-up value of fringe benefits reported on the FBT return, employer superannuation contributions (capped at 11.5% of ordinary times earnings for 2025-26), allowances above the ATO substantiation rates, paid parental leave funded by the employer, and amounts paid to subordinated contractors that the Revenue NSW contractor-deemed-employee tests catch.

Excluded from taxable wages: GST collected on the employee's behalf (none — payroll is GST-free), genuine reimbursements of business expenses with receipts, redundancy pay within the tax-free thresholds set by the ATO, and amounts paid to independent contractors who pass the contractor exemption tests under sections 32 to 35 of the Payroll Tax Act 2007 (NSW). The contractor exemption tests are aggressively audited — if 80%+ of a contractor's income comes from your business, expect Revenue NSW to deem them an employee for payroll-tax purposes.

Grouping under section 71 — and why it matters

Two or more businesses are grouped for NSW payroll-tax purposes if any of these apply: common control (one person or entity controls multiple businesses), common ownership (30%+ common ownership), shared use of employees (an employee performs duties for another business), or use of common business assets. Grouped employers share a single threshold of $1.2M across the entire group — not $1.2M per entity. A two-entity group with $700K NSW wages each (combined $1.4M) owes tax on $200K, not zero.

Grouping is the most common source of Revenue NSW assessments. Family-owned businesses with multiple operating entities, holding companies with operating subsidiaries, and consultants who set up service companies to bill their main entity are all standard grouping triggers. The 'designated group employer' (DGE) lodges a consolidated return for the group; non-DGE members lodge nil returns but their wages aggregate at the DGE. HelloBooks tracks group membership at the entity level so cross-entity wage aggregation is accurate.

Monthly returns, annual reconciliation, and STP integration

NSW payroll-tax employers lodge monthly returns by the 7th of the following month — except July's return, which is part of the annual reconciliation due 28 July. The monthly return is an estimate; the annual reconciliation trues up against actual Australia-wide group wages and produces a refund or balancing payment. HelloBooks generates monthly returns from your STP Phase 2 payroll runs, applies the threshold + rate, and prepares the annual reconciliation in late June so you have buffer for the 28 July deadline.