Western Australia Payroll Tax: Tax Rates & Thresholds for FY 2025–26

Payroll tax is an important compliance obligation for employers operating in Western Australia. As businesses grow and employ more staff, payroll responsibilities become more complex, and many employers seek professional accounting services in Perth to ensure payroll tax is managed correctly.

This guide explains how Western Australia payroll tax applies for the FY 2025–26 financial year, including tax rates, wage thresholds, and key employer obligations.

What Is Payroll Tax in Western Australia?

Payroll tax is a state-based tax charged on wages paid by employers once total annual wages exceed a specified threshold. In Western Australia, payroll tax is administered by the WA Office of State Revenue (OSR).

Payroll tax is paid entirely by the employer and is separate from federal tax obligations. It applies to wages such as salaries, bonuses, superannuation, and certain contractor payments. Maintaining accurate payroll records is essential, which is why many businesses rely on professional bookkeeping services to support payroll accuracy.

Who Needs to Pay Payroll Tax in WA?

You may be required to register for payroll tax in Western Australia if:

• Your total Australian taxable wages exceed the WA payroll tax threshold

• You employ staff in Western Australia

• You engage contractors whose payments are taxable under payroll tax rules

Growing businesses often cross the threshold earlier than expected, which is why small business accountants regularly review payroll figures to identify payroll tax obligations in advance.

Western Australia Payroll Tax Rates for FY 2025–26

For the 2025–26 financial year, the payroll tax rate in Western Australia is:

• 5.5% on wages above the threshold

Payroll tax applies only to the taxable portion of wages above the threshold. Accurate calculations are important, particularly when payroll tax is managed alongside broader business accounting and financial reporting.

Payroll Tax Threshold in Western Australia (FY 2025–26)

The annual payroll tax threshold in Western Australia remains:

• $1,000,000 in taxable wages

Businesses below this level generally do not pay payroll tax. However, employers planning to expand should monitor wage growth carefully as part of forward-looking tax planning.

What Payments Are Subject to Payroll Tax?

Taxable wages in Western Australia may include:

• Salaries and wages

• Bonuses and commissions

• Allowances

• Director fees

• Superannuation contributions

• Certain contractor payments

• Fringe benefits (grossed-up value)

Incorrectly classifying payments is a common payroll tax issue. Regular payroll reviews by a registered BAS agent or accountant can help reduce compliance risks.

Payroll Tax Registration and Lodgement in WA

Once liable, employers must:

• Register with the WA Office of State Revenue

• Lodge payroll tax returns, usually monthly

• Complete an annual reconciliation

• Pay payroll tax by the due dates

Payroll tax reporting often sits alongside BAS returns and other tax lodgements, making accurate record-keeping essential to avoid penalties.

Payroll Tax and Sole Traders

Most sole traders do not pay payroll tax unless they employ staff or engage contractors in a way that triggers payroll tax rules. Reviewing payroll arrangements as part of a sole trader tax return helps identify potential liabilities early.

Common Payroll Tax Mistakes

Some common payroll tax issues include:

• Failing to register after exceeding the threshold

• Misclassifying contractor payments

• Incorrect reporting of fringe benefits

• Missing payroll tax lodgement deadlines

• Overlooking grouped business rules

These issues often arise when payroll tax is handled without structured tax planning and consulting support.

Payroll Tax and Business Growth

Payroll tax should be considered as part of long-term business decision-making. When aligned with business advisory support, payroll tax planning can help businesses manage costs while supporting sustainable business growth and scale.

Need Help With Western Australia Payroll Tax?

If you are unsure whether payroll tax applies to your business, or need assistance with payroll tax registration, lodgement, or compliance, professional support can help reduce risk and improve accuracy.

Working with an experienced accounting firm in Perth ensures payroll tax obligations are managed correctly and aligned with your broader financial strategy.