Western Australia payroll tax: threshold, rate and RevenueWA lodgement
For Perth, Bunbury, Kalgoorlie, Geraldton and mining-sector WA employers — RevenueWA threshold ($1M), rate (5.5%), and the unique diminishing-deduction phase-out between $1M and $7.5M annual wages.
Western Australia's payroll tax is administered by RevenueWA under the Pay-roll Tax Assessment Act 2002 (WA). WA's rate of 5.5% is the highest among the major states, but the structure is unusually generous to mid-sized employers: a diminishing deduction phases out gradually between $1M and $7.5M of annual taxable wages, so the effective rate rises smoothly from 0% at $1M to 5.5% at $7.5M. The state also operates a Local-State Government Grouping carve-out for genuinely independent local-government subsidiaries that other states don't offer. Monthly returns to RevenueWA Online Services are due by the 7th of the following month.
Western Australia payroll tax at a glance
| Field | Value |
|---|---|
| Authority | RevenueWA |
| Free threshold (annual) | $1,000,000 |
| Free threshold | $0 – $1,000,000 · 0% (free) |
| Diminishing-deduction band | $1,000,000 – $7,500,000 · 5.5% |
| Full rate band | $7,500,000 and above · 5.5% |
| Deduction structure | WA's diminishing deduction is unique: from $1M to $7.5M, the threshold deduction phases out linearly so that the effective rate grows from 0% at exactly $1M to a full 5.5% on all taxable wages above $7.5M. The mechanism softens the cliff edge for mid-size employers crossing the threshold — economically you keep most of your deduction at $2M but lose it entirely by $7.5M. |
Rates and thresholds verified against RevenueWA as at 2026-05-18. Re-verify each state budget cycle (typically May/June) before relying on these figures for a lodgement.
Western Australia's diminishing-deduction mechanism
Most states give you a flat threshold ($1M here) and tax everything above at the standard rate. WA's diminishing-deduction model is unique: the effective deduction shrinks linearly as your annual wages grow from $1M to $7.5M, then disappears entirely above $7.5M. The formula is: deduction = $1M × ($7.5M − wages) / ($7.5M − $1M) when wages are between $1M and $7.5M; deduction = 0 when wages > $7.5M.
Practically: a WA employer with $2M wages gets a $846,154 effective deduction (the formula yields $1M × $5.5M / $6.5M); the rate applies to ~$1.15M giving payroll tax of ~$63,500. The same employer in NSW (5.45% rate, hard $1.2M threshold) would pay 5.45% on $800K = $43,600. The diminishing model is harsher for small WA employers but smoother than a cliff-edge would be. HelloBooks computes the deduction line-by-line each month and surfaces the running annual position.
Grouping, contractor tests, and the mining-sector lens
WA's grouping rules follow the harmonised model (common control 50%+, ownership 30%+, shared employees, shared assets) but RevenueWA applies them strictly in the mining and resources sector where complex contractor arrangements are routine. The contractor exemption test (genuine independence, not 80%+ income from one principal, own ABN + insurance) is audited rigorously — and RevenueWA has won several Supreme Court cases against mining services contractors who failed the test.
Because WA's mining sector employs large numbers of FIFO (fly-in fly-out) workers whose principal place of employment can be debated, FIFO employer status is also a frequent audit topic. Where FIFO workers are paid to/from a mine site outside WA but the employer is WA-based, the wages may be subject to nexus rules in the Pay-roll Tax Assessment Act 2002 (WA) Division 2.
Monthly returns, annual reconciliation, and RevenueWA Online
WA payroll-tax employers lodge monthly returns by the 7th of the following month via RevenueWA Online. The June return is replaced by the annual reconciliation due 21 July. The annual reconciliation applies the diminishing-deduction formula to actual full-year Australia-wide group wages and produces the final balancing position. HelloBooks integrates with STP Phase 2 to pull payroll runs into the monthly return and computes the diminishing-deduction line automatically.
Questions Western Australia employers ask
Other Australian state payroll-tax guides
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