If you are an employer in Tasmania and want to understand how payroll tax works, you’re in the right place. Payroll tax can feel confusing at first, but once you know the basics, like when to register, what wages are included, and how the tax is calculated, it becomes much easier to manage.
In Tasmania, payroll tax is calculated on wages you pay (or are liable to pay) and is collected and administered under Tasmanian payroll tax legislation. Since it is a self-assessed tax, employers are responsible for working it out themselves, lodging returns, and making payments on time. This makes it crucial to understand the rules so you stay compliant and avoid penalties.
While most payroll tax rules were harmonised across Australia in 2007, each state and territory, including Tasmania, still has its own thresholds, rates, and exemptions. Knowing the Tasmanian-specific requirements will help you manage payroll tax with confidence.
Recommended Reads
- Understand Payroll Tax Basics Across Australia
- Payroll Tax in the Australian Capital Territory (ACT)
- Payroll Tax in New South Wales (NSW)
- Payroll Tax in Northern Territory (NT)
- Payroll Tax in Queensland (QLD)
- Payroll Tax in South Australia (SA)
Who should register?
Any employer who pays wages to employees in Tasmania is liable to pay payroll tax if their total Australian wages are more than $1.25 million per year (or $24,038 per week during a month).
This applies whether your business is based in Tasmania or elsewhere in Australia. If you pay wages in Tasmania and your total Australian wages go over the threshold, you must pay payroll tax on the Tasmanian portion.
If you are part of a group of businesses, the threshold is worked out on the group’s combined Australian wages. So, even if your own business wages are below the limit, you may still be liable if the group total exceeds $1.25 million.
Liable employers should register themselves at Tasmanian Revenue Online (TRO).
Follow the link to register as a new user - Register - Tasmanian Revenue Online
Follow the link to log in to an existing account - Tasmanian Revenue Online
Payroll Tax Rates and Thresholds (2025–26)
For the 2025–26 financial year, payroll tax in Tasmania is calculated on the total wages you pay in Australia. The threshold and rates are set by the state government and may change periodically.
The rates are:
- Wages up to $1,250,000 – no payroll tax (0%)
- Wages between $1,250,001 and $2,000,000 – 4%
- Wages over $2,000,000 – 6.1%
Monthly thresholds vary depending on the number of days in the month and whether or not you are part of a payroll tax group. These amounts are rounded to the nearest dollar. If you cannot work out your total Australia-wide wages each month, you can use an estimate based on one-twelfth of the previous year’s total wages.
If you choose not to claim a threshold, you must pay 6.1% payroll tax on all of your Tasmanian taxable wages for that month.
Payroll Tax Returns and Payments
In Tasmania, all payroll tax returns and payments are managed online through Tasmanian Revenue Online (TRO). If you’re registered for payroll tax, you must:
- Lodge periodic returns (usually monthly).
- Lodge an Annual Adjustment Return (AAR) at the end of the financial year.
- Make payments in line with your lodged returns.
Periodic Returns
- Most employers lodge monthly returns.
- In some cases, depending on your wages, you may be approved to lodge annual returns instead.
- Your return frequency is decided based on the information you provide when registering or through your ongoing reporting.
- Due date: Returns and payments are due by the 7th of the following month (except for June).
- Example: The October return must be lodged and paid by 7 November.
Annual Adjustment Return (AAR)
- The June return is replaced by the Annual Adjustment Return (AAR).
- The AAR is available on TRO from June each year and must be lodged by 21 July (or the next working day if the 21st falls on a weekend).
- It requires details of wages for the entire financial year.
- You can also fix mistakes or make amendments from earlier months in the same year when lodging your AAR.
If you can’t lodge your AAR by 21 July, you should make an Interim Payment via TRO. This helps reduce any interest charges. If you lodge the AAR with full payment on time, no interim payment is needed.
Adjustments for Previous Years
If you need to correct wages or payments from earlier financial years, you can also do this through TRO. The system will automatically determine whether you owe extra tax (including interest) or are due a refund.
What Counts as Taxable Wages?
The following types of payments are considered taxable wages for payroll tax purposes:
- salaries and wages
- commissions
- annual leave, long service leave and sick leave
- pay in lieu of notice
- non-monetary superannuation contributions
- travel and accommodation allowances that are above the prescribed rates
- bonuses, prizes and incentive payments
- make-up payments made by the employer for workers’ compensation
Exempt Wages
Some wages are exempt from payroll tax under Part 4 of the Payroll Tax Act 2008. Exemptions generally apply to wages paid to employees of:
- religious institutions
- non-profit private hospitals
- private schools or colleges that only provide education up to the secondary level
- defence forces
- public benevolent institutions
- non-profit charitable organisations
For more details on taxable and exempt wages, you can check the official guidance here: Taxable and exempt wages
Grouping Provisions
Employers can be grouped for payroll tax purposes under certain conditions. When grouped, their wages are combined to calculate payroll tax liability. Grouping generally applies when:
- Companies are related (e.g., a holding company and its subsidiaries, or subsidiaries of the same holding company).
- Employees of one business work mainly for another business.
- Two or more businesses are commonly controlled by the same person(s).
Key Definitions
- Business: Includes a trade, profession, activity for gain, employing people for another business, running a trust, or holding property used for another business.
- Related Corporations: Defined under Section 50 of the Corporations Act 2001 and include holding companies, subsidiaries, and corporations under the same ultimate holding company.
- Use of Employees in Another Business: A group is formed if an employee works primarily for another business, or there’s an arrangement covering the employee’s duties.
- Commonly Controlled Businesses: Businesses are grouped if the same person(s) have a controlling interest in multiple businesses.
This ensures that all wages from connected or related entities are considered together for payroll tax purposes.
Conclusion
Understanding payroll tax in Tasmania is essential for employers to ensure compliance and avoid penalties. By registering when required, accurately calculating taxable wages, and adhering to reporting deadlines, businesses can manage their obligations effectively. Utilising resources like the State Revenue Office's guidelines and seeking professional advice when needed can further simplify the process.
Find all the details on payroll tax in Tasmania here - Employers’ guide to payroll tax 2024-25
Refer to examples of how to calculate the thresholds and your payroll tax through this link - Payroll Tax Annual Adjustment Return Guideline
