State payroll tax developments employers should consider ahead of annual reconciliations

Payroll tax remains a significant compliance and cost consideration for Australian employers, particularly those operating across multiple states and territories. With state-based rules continuing to evolve, and annual reconciliations providing a natural reset point for checking positions, employers should stay proactive in reviewing payroll tax governance, grouping positions, wage mapping, contractor treatment and documentation.

Australian Capital Territory: new top payroll tax rate from 1 January 2026

What has changed?

From 1 January, 2026, a new 8.75 per cent payroll tax rate applies in the ACT for employers, or groups of employers, with annual Australia-wide wages exceeding $150 million. The change follows passage of the Payroll Tax Amendment Bill 2025 on 4 December, 2025 and notification of the Payroll Tax Amendment Act 2025 on 15 December, 2025.

Former provision: for the first half of the 2025-26 financial year (1 July 2025 to 31 December 2025), the ACT rates remained at a 6.85 per cent general rate, with a 0.5 per cent surcharge for employers or groups with annual Australia-wide wages above $50 million and a 1.0 per cent surcharge for employers or groups above $100 million. In other words, employers above $150 million move from an effective 7.85 per cent rate in the first half of FY2025-26 to 8.75 per cent in the second half.

Additional context: in 2024-25, the ACT surcharge settings were lower again - 0.25 per cent above $50 million and 0.5 per cent above $100 million. Including that context helps show that the ACT burden for larger groups has been stepping up over time.

‍Why this matters

Mid-year rate change. For affected employers, FY2025-26 is now a split-rate year. That means monthly returns from January 2026 and the annual reconciliation due on 28 July, 2026 should be reviewed carefully to ensure the correct rates have been applied across both halves of the year.

Grouping and Australia-wide wages. Eligibility for the 8.75 per cent rate is determined using annual Australia-wide wages at the employer or group level, rather than ACT wages alone. That makes grouping analysis particularly important for large corporate groups and businesses with complex ownership or operating structures.

Cost and planning implications. For groups caught by the new top rate, the change increases ACT payroll tax exposure for the second half of FY2025-26 and should be reflected in budgeting, forecasting and any broader workforce or location planning.

‍Practical considerations for employers

• Review group structures and confirm how Australia-wide wages are being aggregated.
• Check that payroll system inputs are correct for January 2026 onwards, while noting that the ACT Self-Service Portal calculates the applicable rate automatically from the figures declared.
• Model the impact of the higher rate on the FY2025-26 annual reconciliation and future ACT liabilities.
• Maintain a clear working paper trail for split-period calculations used in the annual return.

Queensland: apprentice and trainee payroll tax rebate extended

What has changed?

Queensland has extended the 50 per cent payroll tax rebate for apprentice and trainee wages through to 30 June, 2026. The legislative extension was implemented by the Revenue and Other Legislation Amendment Act 2025, and QRO now states that the 50 per cent rebate is available for each financial year from 1 July 2016 to 30 June 2026.

Former provision: the former position was that the 50 per cent rebate had only been extended to 30 June, 2025. The 2025-26 measure changes the end date, rather than the rebate percentage or the underlying mechanics of the concession.

It is also worth making clear that eligible apprentice and trainee wages are generally already exempt from Queensland payroll tax. The rebate therefore operates as an additional concession for eligible employers, rather than a standalone exemption.

‍Why this matters

Continued relief. The extension preserves a meaningful payroll tax saving for eligible employers who engage apprentices and trainees and whose annual Australian taxable wages bring them into the Queensland payroll tax system.

Substantiation remains important. QRO requires rebate records to be kept for at least five years. It is therefore prudent to make sure the wages included in the claim are genuinely linked to signed and registered training contracts and are paid in the course of the apprenticeship or traineeship.

Scope discipline. Where an apprentice or trainee performs multiple roles or duties, only wages that fall within the relevant apprenticeship or traineeship arrangement should be treated as exempt and form part of the rebate calculation.

‍Practical considerations for employers

• Review year-to-date apprentice and trainee wage classifications before lodging the annual return.
• Confirm that training contracts are signed, registered where required and retained on file.
• Exclude wages that relate to periods outside the apprenticeship or traineeship, or to duties outside the relevant arrangement.
• Reconcile the apprentice and trainee figures entered in QRO Online back to payroll records before lodgement.
• Retain supporting records for at least five years.

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Key takeaways for employers

• The ACT’s 2025-26 payroll tax settings now require a split-year analysis for very large employer groups, with an 8.75 per cent rate applying above $150 million from 1 January, 2026.
• The most useful “former provision” comparison in the ACT is between the 1 July to 31 December, 2025 effective 7.85 per cent rate for employers above $100 million and the 8.75 per cent rate above $150 million from 1 January 2026. For broader context, the 2024–25 surcharge settings were lower again.
• Queensland’s apprentice and trainee rebate has not changed in percentage terms; the key change is that its availability has been extended to 30 June, 2026.
• Across both jurisdictions, the annual reconciliation process is a good time to revisit grouping positions, wage classifications, contractor treatment and recordkeeping.

Sovereign Private will continue to monitor legislative developments and guidance as they emerge.

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Disclaimer

The information contained in this publication is general in nature and does not take into account your personal objectives, financial situation or needs. It is provided for information purposes only and does not constitute financial or taxation advice. Before making any decision, you should consider your specific circumstances and seek appropriate professional advice.

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