Payroll tax NSW: 2026–27 rate, threshold, due dates and how it works

NSW has the simplest payroll tax design in the country: one rate, one threshold, no taper and no surcharges. That simplicity is also why it catches people. There's no gentle phase-in, so the day your group's wages pass the threshold, every dollar above it is taxed at 5.45%. And because the threshold is tested on the wages of every business you're grouped with, many owners cross it without any single entity looking big.

This guide covers the 2026–27 NSW rate and thresholds, how the tax is calculated when you also employ interstate, grouping, how Revenue NSW applies the contractor and employment agency rules (including the cases decided in 2026), the exemptions and rebates that matter, the lodgement calendar, penalties, and a worked example. For the national picture, see our guide to payroll tax by state.

NSW payroll tax at a glance (2026–27)

The rate has been 5.45% since 1 July 2022 and the $1.2 million threshold has applied since 1 July 2020. Neither is indexed, and the 2026–27 NSW Budget didn't change either.

What's changed in NSW payroll tax recently?

• 1 July 2026: rate (5.45%) and threshold ($1.2 million) unchanged for 2026–27; Revenue NSW published new monthly thresholds and a key dates page.
• 30 June 2026: SKG Cleaning confirmed a broad reading of the employment agency provisions for outsourced labour.
• 8 April 2026: the High Court heard Uber's appeal (judgment reserved as at 23 October 2026). A decision will affect contractor arrangements in every state that uses the harmonised provisions.
• 4 September 2024: the cut-off for the exemption of past unpaid tax on contractor GP payments, and the start of the bulk-billing rebate for medical centres.

We'll update this guide when the High Court delivers judgment in Uber.

What is the NSW payroll tax rate and threshold for 2026–27?

NSW payroll tax for 2026–27 is 5.45% of taxable wages above a $1,200,000 annual threshold, with no surcharge, no regional rate and no taper. Revenue NSW confirmed both figures on its thresholds and rates page, updated 1 July 2026.

The threshold is an annual figure, but Revenue NSW also publishes a monthly figure for each month length. These are what you compare against when deciding whether to register and when lodging monthly returns:

Two things reduce the threshold you can actually use:

• Interstate wages. If you also pay wages in another state, you get only the NSW share of the threshold: $1.2 million × NSW wages ÷ total Australian wages.
• Part-year employment. If you employed for only part of the year, the threshold is pro-rated by the days you employed.

If you're in a group, only the designated group employer claims the threshold, on behalf of the whole group.

How is NSW payroll tax calculated?

The formula is (NSW taxable wages − your share of the threshold) × 5.45%. For a business that only employs in NSW and isn't grouped, that's simply wages above $1.2 million times 5.45%.

Because NSW has no taper, a large employer still gets the full threshold. That makes NSW cheaper than Victoria or WA for big payrolls, and more expensive than Queensland or South Australia for some smaller ones.

During the year you calculate each monthly return against the monthly threshold. After 30 June, the annual reconciliation recalculates the whole year against the annual threshold and your actual interstate wages, and you pay any shortfall or get a refund.

Who has to register for payroll tax in NSW, and when?

You must register with Revenue NSW if you pay wages in NSW and your total Australian wages, or your group's, pass the monthly threshold in any month. Revenue NSW asks you to register within 7 days after the end of that month.

The trigger is the month, not the year. A business with $1.1 million of annual wages can still have to register if one month is heavy, for example a bonus month, then reconcile to the annual threshold later.

Once registered:

• You lodge monthly returns, unless Revenue NSW allows annual lodgement. Revenue NSW says employers whose annual NSW liability is above $20,000 pay monthly.
• You lodge an annual return every year, even if it's a nil return.
• If your wages drop below the threshold permanently, apply to cancel the registration rather than just stopping.

Registration is done online through Revenue NSW's payroll tax system. Have your ABN, wage totals by month, interstate wages and details of every business you're grouped with ready.

What counts as wages for NSW payroll tax?

Taxable wages are much broader than salary. NSW follows the harmonised definition used by most states. It includes:

Not wages: Commonwealth Paid Parental Leave, dividends, partnership drawings, trust distributions, GST, genuine expense reimbursements and workers compensation payments.

How does payroll tax grouping work in NSW?

Grouping adds related businesses together so they share one $1.2 million threshold, and makes every member jointly and severally liable for the whole group's tax. The rules are in Part 5 of the Payroll Tax Act 2007 (NSW). Businesses are grouped if they:

• are related corporations under the Corporations Act (a holding company and its subsidiaries);
• share employees, where staff of one work for or in another;
• are under common control, for example the same person or people hold more than 50% of each, directly or through trusts;
• are linked by tracing interests through chains of companies and trusts.

For discretionary trusts, each beneficiary can be treated as holding a controlling interest, which is why a family trust's business often ends up grouped with the family company.

The Chief Commissioner can exclude a business from a group (other than related corporations) if it's carried on independently, but you have to apply and show it. Assume you're grouped until you've been told otherwise.

Our business structure advice looks at whether your structure creates grouping you didn't plan for.

Do contractors count for NSW payroll tax?

Often, yes. The contractor provisions (Division 7 of Part 3) treat payments under a "relevant contract" as wages, and the employment agency provisions tax on-hire arrangements, even where the workers are genuine contractors for Fair Work and ATO purposes.

A contract for services is generally caught unless an exemption applies. In general terms the exemptions cover services that are ancillary to supplying goods; services of a kind your business doesn't ordinarily need; services you need for 90 days or less in a financial year (for the same or similar services from that contractor); services the contractor ordinarily provides to the public generally; and arrangements where the contractor engages others to do the work. Each has conditions, and you need the evidence on file.

NSW cases to know (as at 23 October 2026)

Watch out: None of these cases turned on whether the workers were "really" contractors. They turned on how the money flowed and what the business needed. Test the arrangement against the payroll tax rules specifically. Our employee vs contractor guide explains why the Fair Work and ATO answers don't settle this.

Not sure which side of the line your arrangements fall? Ask us.

What exemptions and rebates apply in NSW?

NSW gives fewer outright exemptions than some states, and it handles apprentices and medical centres through rebates rather than exemptions.

Apprentice and trainee wages still count towards your total wages for the threshold. The rebate then reduces the tax.

Medical centres and contractor GPs

Revenue NSW applies the contractor provisions to medical centres (Revenue Ruling PTA-041). Relief under Commissioner's Practice Note CPN 036v2:

• Before 4 September 2024: unpaid payroll tax on relevant contractor GP payments is exempt (already-paid tax isn't refunded).
• From 4 September 2024: a rebate of the payroll tax on contractor GP payments, if at least 80% of the centre's GP services are bulk billed (or under veterans' arrangements) in Metropolitan Sydney, or at least 70% elsewhere in NSW. The test counts all GP services at the centre, including those by employee GPs.

The rebate covers contractor GPs only, not employee GPs, nurses or admin staff, and you need records of bulk-billed and private services to support it. See our page for medical practices and health services.

When are NSW payroll tax returns due in 2026–27?

Monthly returns and payments are due on the 7th of the following month (14 January for December), and the 2026–27 annual reconciliation is due on 28 July 2027. If a due date falls on a weekend or public holiday, it moves to the next business day. June wages go into the annual return, not a separate monthly return.

Source: Revenue NSW key dates for payroll tax.

What are the penalties for late or unpaid NSW payroll tax?

Late tax attracts interest at the market rate plus an 8% premium (12.51% a year for October to December 2026), and penalty tax of up to 30% where reasonable care wasn't taken, or up to 90% for intentional disregard. A written voluntary disclosure cuts the penalty sharply.

No penalty tax applies where the default was beyond your control and you took reasonable care. Rates are for most taxpayers; significant global entities pay higher rates.

Revenue NSW can assess back years. If you should have been registered and weren't, the cheapest path is almost always to quantify the exposure and make a voluntary disclosure before Revenue NSW contacts you.

Worked example: NSW payroll tax for a grouped family business

Hypothetical, rounded, 2026–27 rates.

Say a family owns two businesses. The husband's company runs an electrical contracting business in Sydney with $900,000 of taxable wages (gross wages plus super). A family trust, controlled by the same couple, runs a security system installation business with $650,000 of wages, of which $150,000 is paid to staff in Queensland. The trust also pays $120,000 to a labour-only subcontractor who works three days a week, every week, on the trust's jobs.

Step 1: Group. Common control (the same couple controls both) groups the company and the trust.

Step 2: Total Australian wages. $900,000 + $650,000 + $120,000 (the subcontractor is likely caught as a relevant contract, as none of the exemptions fits) = $1,670,000.

Step 3: NSW wages. $900,000 + $500,000 + $120,000 = $1,520,000. NSW share = $1,520,000 ÷ $1,670,000 = 91.0%.

Step 4: NSW threshold. $1,200,000 × 91.0% = $1,092,000 (claimed by the designated group employer).

Step 5: Tax. ($1,520,000 − $1,092,000) × 5.45% = about $23,300 for the year.

Neither business looks like a payroll tax payer on its own. Together they are, and they would also need to check Queensland's position on the $150,000 paid there. If they had been over the threshold for three years without registering, the back tax would be about $70,000 before interest and penalties.

How BPAG helps with NSW payroll tax

We map your group, test your contractor and labour hire arrangements, work out the threshold share for each state, and handle registration, monthly returns and the annual reconciliation. Our NSW state taxes agent works through NSW payroll tax, grouping and concessions in detail and our state taxes agent handles any other states you employ in; a qualified accountant reviews every calculation before anything is lodged or relied on.

If you're already over and unregistered, we quantify the exposure first so you know the number before you decide how to approach Revenue NSW. Our state taxes service covers payroll tax, land tax and duty together, and our payroll and Payday Super service keeps the wage figures right in the first place. We work with NSW businesses from our Sydney office and remotely across the state.

What to send us

• Payroll summaries for the last 12 months (and up to 5 years if you may have been liable earlier) for every entity you, your spouse or your family trusts control
• A list of entities with their owners, directors and trust beneficiaries
• Contractor and labour hire payments with copies of the agreements
• The state or territory where each employee and contractor works
• Any Revenue NSW letters, assessments or registration details
• For medical centres: GP agreements and Medicare billing reports showing bulk-billed and private services

General information only, current as at 23 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.