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Taxable wages for payroll tax

You must report the following taxable wages when lodging your payroll tax return in Queensland:

  • cash and non-cash wages
  • third-party payments
  • salary sacrifice amounts.

Salary sacrifice amounts are cash wages that an employee has chosen to forgo in return for other benefits.

In general, wage payments are liable for payroll tax if they are:

  • a reward for services rendered by an employee, deemed employee or director
  • payments to which the recipient has an enforceable right.

The tabs below cover common payments employees receive, and identify which of these payments are taxable.

Leave, allowances & benefits

Payroll tax can apply to payments made to employees in the form of leave, allowances and benefits.

The tables below list typical payments and if they are taxable.

Leave

Type  Liability
Accident pay 

Taxable if you pay:

  • wages paid for the day of injury
  • an employee is away from work after an accident
  • compensation for a work-related injury where the claim is not approved under the Workers’ Compensation and Rehabilitation Act 2003
Australian Government Paid Parental Leave scheme Not taxable
Holiday pay

Taxable

Jury service Taxable
Leave loading

Taxable

Long service leave

Taxable

Make-up pay

Taxable

Military leave  Not taxable
Parental, adoption and surrogacy leave  Not taxable for wages paid to a maximum of 14 weeks, or the equivalent amount if taken over a longer period
Sick leave

Taxable

Volunteer worker leave 

Not taxable if the employee is:

  • a volunteer member of a rural fire brigade
  • a volunteer member of the State Emergency Service
  • an honorary ambulance officer
Workers’ compensation payment  Not taxable if it is a:

  • compulsory payment insuring against accidental, work-related injuries
  • WorkCover Queensland compensation payment


Allowances

Type Liability
Accommodation  Taxable for the part of the allowance over the exempt rate as long as it is used for overnight accommodation—this can also include meals and incidentals
Clothing

Taxable

Living away from home  Taxable in accordance with the Fringe Benefits Tax Assessment Act 1986 (Cwlth)
Meals

Taxable

Motor vehicle  Taxable over the exempt component when you calculate the number of kilometres an employee travels for business purposes in their own car
Overtime

Taxable

Relocation

Taxable

Tool

Taxable


Benefits

Type Liability 
Car parking fringe benefits Not taxable unless part of a salary sacrifice arrangement
Cars Taxable
Salary sacrifice arrangements

Taxable

If in exchange for fringe benefits, the fringe benefits' grossed-up value is taxable. Otherwise, the entire sacrificed amount is taxable

Entertainment fringe benefits Not taxable if the organisation is a tax-exempt body
Exempt benefits  Not taxable as of 1 July 2011
Fringe benefits 

Taxable (except for certain car parking and entertainment fringe benefits)

Valued using the Type 2 gross-up factor

Gifts Taxable (includes discounts)
Low-interest or interest-free loans

Taxable

Non-cash benefits Taxable if they form or are defined as wages
Reimbursements

Not taxable unless a fringe benefit

An expense payment fringe benefit may arise where an employer:

  • reimburses an employee for expenses incurred by the employee
  • pays a third party for the expenses incurred by the employee

These expenses may be business or private expenses or both

Termination & other payments

If you make payments to your employees in addition to their regular remuneration, they may be taxable in Queensland.

Read the following list of payments to work out if you must include them in your payroll tax return.

Termination payments

The table below lists the different types of termination payment and if they are taxable.

Find out more about termination payments.

Type  Liability 
Payments in lieu of notice

Taxable if the employee must include it for income tax purposes

Ex gratia payments or 'golden handshakes' Taxable if the employee must include it for income tax purposes
Genuine redundancy payments Not taxable if exempt from income tax
Early retirement scheme payments Not taxable if exempt from income tax
Unused annual leave Taxable
Unused long service leave Taxable


Commissions, dividends, GST, superannuation, and shares and options

Type  Liability 
Bonuses Taxable
Commissions

Taxable if this is payable to an employee, including a:

  • time-payment canvasser or collector
  • insurance canvasser or collector

You must include commissions in your return for the period in which the sale is settled or when the commission is paid, whichever happens first

Dividends (company share) Not taxable
GST

Not taxable

Superannuation contributions

Taxable whether for an employee or non-employee director

Superannuation guarantee levy

Taxable

Shares and options

Taxable

Other types of wages

Depending on certain conditions, payments to particular types of employees are not taxable.

Find out these conditions in the tables below.


Types of employees

Type  Liability 
Apprentices 

Not taxable if the employee works for the whole period as an apprentice under the Further Education and Training Act 2014 (or, before 30 June 2014, the Vocational Education, Training and Employment Act 2000)

Taxable if they are not performing services as an apprentice

Community Development Employment Project employees (administered under the Remote Jobs and Communities Program) Not taxable if wages are paid to an Aboriginal or Torres Strait Islander person employed under this program
Consular staff Not taxable
Contractors 

Taxable for work performed after 1 July 2008 where no exemption applies

You must ensure that these workers do not fit into the definition of an employee, as different conditions apply

Directors  Taxable
Trainees  Not taxable if the employee works for the whole period as a trainee under the Further Education and Training Act (or, before 30 June 2014, the Vocational Education, Training and Employment Act), subject to certain conditions
Union representatives or board members 

Taxable if:

  • an employer employee relationship exists between the parties

or

  • the payments are remuneration to a director or member of the governing body of the union
Workers provided by an employment agent  Not taxable—the agency is liable instead


Not-for-profit and government wages

Type  Liability 
Exempt charitable institutions 

Not taxable if the exempt charitable institution pays a person:

  • working exclusively for that organisation
  • performing services that meet the qualifying criteria
Local authorities or councils

Not taxable unless the wages are being paid in connection with the following activities:

  • abattoirs
  • bakeries
  • cemeteries
  • electricity generation, distribution or supply
  • hostels and hotels
  • milk supply
  • parking stations
  • picture theatres
  • public markets
  • quarries
  • sewerage
  • transport
  • water supply


Wages for other commercial activities will be subject to a payroll tax equivalent

Public hospitals Not taxable where the employee performs duties that are usually performed in connection with a public hospital
Queensland Government departments as per s.8 of the Financial Accountability Act 2009

Not taxable unless paid by a commercialised business unit as per s.39 of the Queensland Competition Authority Act 1997

Queensland hospital and health services as per s.17 of the Hospital and Health Boards Act 2011 Not taxable for hospital and health services established under the Hospital and Health Boards Act 2011

Nexus rules

All wages paid to an employee for a month's service are taxable in one jurisdiction.

The Payroll Tax Act 1971 was amended from 1 July 2009 to introduce nexus rules.

These rules identify the jurisdiction (state or territory) that can charge payroll tax to prevent double-taxing (i.e. charging tax in more than one jurisdiction).

The table below explains when wages are taxable in Queensland under the nexus rules, from 1 July 2009.


Nexus rules

Type   Liability
Wages paid or payable for services performed entirely in Queensland 

Taxable in Queensland

Wages paid or payable in Queensland for entire overseas employment—up to 6 months

Taxable in Queensland

Wages paid or payable in Queensland for entire overseas employment—more than 6 months Not taxable if the employment is in another country for a continuous period of longer than 6 months

The 6-month period starts on the date of the first wage payment for the overseas service

Wages paid or payable in Queensland for services performed in more than one state or territory

Apply the 4 tiered tests to determine whether wages are taxable in Queensland:

  1. the employee's principal place of residence
  2. the employer's registered ABN address or principal place of business
  3. the place where the wages are paid to the employee
  4. the place where the services are mainly performed

 

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