Taxable wages
What is taxed?
Pay-roll tax is payable by employers on taxable wages. Taxable wages include:
- cash wages
- commissions
- directors' fees
- non-cash wages
- bonuses
- salaries
- fringe benefits - taxable fringe benefits are those taxed under the Fringe Benefits Tax Act 1986 (Cwlth). From 1 July 2002, pay-roll tax is payable on the fringe benefit taxable amount - that is, the grossed-up value of a fringe benefit.
Car parking fringe benefits are excluded from pay-roll tax, unless provided in lieu of a cash component of a salary package, e.g. sacrifice of $2,000 of a total salary for the car parking benefit
- allowances - generally, all allowances are taxable. However, under certain conditions, accommodation allowances and travelling allowances (motor vehicle allowances) are taxed on only part of the allowance. Refer to the Accomodation allowances and Travelling allowances sections (contained within the Checklist of taxable wages) of the Pay-roll tax Information Kit for more information
- salary sacrifice
- employer superannuation contributions
- taxable eligible termination payments. - from 1 July 2002, "wages" for pay-roll tax purposes include taxable eligible termination payments (ETPs). "Taxable ETPs" are assessable under the Income Tax Assessment Act 1936 (Cwlth) if paid to an employee, but does not include a death benefit ETP.
Payment for an employee's accrued wages and leave entitlements (such as holiday pay and long service leave) are taxable upon termination of employment. Payments in lieu of notice, severance or redundancy payments are also taxable.
Note: Where taxable wages include a GST component, no pay-roll tax applies to that component
In general, payments are liable to pay-roll tax if they are:
- a reward for services rendered by an employee
- payments to which the employee has an enforceable right
- taxable eligible termination payments.
This includes cash salary which an employee elects to forego in return for other benefits. A typical example is sacrificing cash for additional superannuation contributions.
Note: Where an employee sacrifices an increase in cash wages for additional superannuation contributions by the employer, the amount sacrificed is taxable.
Wages paid outside Queensland, for services rendered wholly during a month within Queensland, are taxable in Queensland.
Refer to the Checklist of taxable wages section in the Pay-roll tax Information Kit for more information on taxable wages.
