Calculation: Payroll Tax Employer Guide

Tax is calculated on a gradual diminishing tax-free threshold that gradually phases out between the annual threshold of $1,000,000 and the upper threshold of $7,500,000.

From 1 July 2023, the payroll tax rate is 5.5% on the taxable wages paid by employers or groups of employers.

A diminishing threshold will apply for employers or groups of employers with annual taxable wages in Australia between the annual threshold of $1 million and the upper threshold of $7.5 million. The threshold can be apportioned if you don't pay wages for a whole financial year, become a member of a group or stop being a member of a group.

Calculate your payroll tax liability.

Employer registration status

An employer means any person who pays or is liable to pay, any wages. This includes the Crown in right of the State of Western Australia and an employment agent.

We calculate your payroll tax liability after you have declared your taxable wages. The calculation depends on the type of employer you are. 

Local non-group employer

An employer who pays wages only in Western Australia and is not related to, or grouped for payroll tax purposes with, any other wage-paying entity. 

Local group employer 

An employer who is grouped with at least one other wage-paying entity and all members of the group pay wages only in Western Australia.

A designated group employer (DGE) must be nominated for every group and must pay wages in WA. 

Interstate non-group employer 

An employer who pays wages both in Western Australia and at least one other Australian State or Territory and is not related to, or grouped for payroll tax purposes with, any other wage-paying entity. 

Interstate group employer 

An employer who is grouped with at least one other wage-paying entity and pays wages in Western Australia. At least one member of the group pays wages in another Australian State or Territory.

A designated group employer (DGE) must be nominated for every group and must pay wages in WA.

Current rates and thresholds

From 1 July 2023, the payroll tax rate is 5.5% on the taxable wages paid by employers or groups of employers. A diminishing threshold will apply for employers or groups of employers with annual taxable wages in Australia between $1 million and $7.5 million. See videos about the diminishing tax-free threshold.

For example, if an employer pays monthly wages of $92,000, for the 2023-24 assessment year, their total wages of $1,104,000 exceed the annual taxable threshold. Payroll tax of $6,600 will apply during this period.

Use our payroll tax calculator to estimate your liability.

From 1 July 2023 - when monthly Australian taxable wages are more than $83,333
Annual Australian taxable wagesTax rateCalculation of tax payable
More than $1 million but less than $7.5 million5.5%WA taxable wages - deductable amount x tax rate
$7.5 million or more5.5%WA taxable wages
x tax rate

Previous rates and thresholds

1 July 2020 - 30 June 2023 - when monthly Australian taxable wages are more than $83,333
Annual Australian taxable wagesTax rateCalculation of tax payable
More than $1 million but less than $7.5 million5.5%WA taxable wages - deductable amount x tax rate
$7.5 million or more but not exceeding $100 million5.5%WA taxable wages
x tax rate
More than $100 million but not exceeding $1.5 billion*5.5% for wages up to
$100 million
+
6% for wages from $100 million to $1.5 billion
WA taxable wages
x tax rate
More than $1.5 billion*5.5% for wages up to
$100 million
+
6% for wages from $100 million
to $1.5 billion
+
6.5% for wages above
$1.5 billion
WA taxable wages
x tax rate

 

1 July 2019 - 30 June 2020
PeriodAnnual thresholdHalf-year taxable thresholdHalf-year upper threshold
1 July - 31 December 2019$850,000$425,000$3,750,000
1 January - 30 June 2020$950,000$475,000$3,750,000

 

Before 1 July 2019
Annual Australian taxable wagesTax rateCalculation of tax payable
1 July 2018 - when monthly Australian taxable wages are more than $70,833
More than $850,000 but less than $7.5 million
From 1 July 2019 to 30 June 2020, this amount is affected by the threshold changes in the table above.
5.5%WA taxable wages - deductable amount x tax rate
$7.5 million or more but not exceeding $100 million5.5%WA taxable wages
x tax rate
More than $100 million but not exceeding $1.5 billion*5.5% for wages up to
$100 million
+
6% for wages from $100 million to $1.5 billion
WA taxable wages
x tax rate
More than $1.5 billion*5.5% for wages up to
$100 million
+
6% for wages from $100 million
to $1.5 billion
+
6.5% for wages above
$1.5 billion
WA taxable wages
x tax rate
1 July 2016 - 30 June 2018 - when monthly Australian taxable wages are more than $70,833
More than $850,0005.5%WA taxable wages
x tax rate
1 July 2014 - 30 June 2016 - when monthly Australian taxable wages are more than $66,667
More than $800,0005.5%WA taxable wages
x tax rate

* A single payroll tax liability is calculated based on the combination of rates.

Calculating the diminishing threshold

A tapering value formula is used to calculate the gradual reduction in the deductable amount which employers may claim against their WA taxable wages between the annual threshold amount of $1,000,000 and the upper threshold amount of $7,500,000.

From 2020-21, the tapering value is based on the upper thresholds shown above.

TV = AT / (UT - AT or $1,000,000 / ($7,500,000 - $1,000,000)

Where

  • TV is the tapering value
  • AT is the annual threshold amount for the year
  • UT is the upper threshold amount

This can be simplified to 2/13.

This means the threshold amount will reduce by $2 for every $13 of wages over the threshold.

The deductable amount is equal to AT - [(Wages - AT) X TV]

For example, for annual wages of $1,200,000, the deductable amount (threshold) would be
$1,000,000 - [($1,200,000 - $1,000,000) X (2/13)] = $969,231

Last updated:
Was this page useful?