Payroll Tax

The State Government has made job creation a priority. Given that more than 86 per cent of jobs in Queensland are created by the private sector, the most efficient way to incentivise small business job creation is by lifting the payroll tax threshold.

The payroll tax rate in Queensland sits at 4.75 per cent. The payroll tax exemption threshold is $1.1 million. Queensland small businesses view the payroll tax as a tax on employment and a penalty for giving someone a job. 

The biggest impact payroll tax has on business decision-making occurs when the total payroll approaches the exemption threshold. The effective marginal cost of employing additional labour increases once the employer moves through the exemption threshold and becomes liable for payroll tax.

As a direct result, payroll tax limits the expansion of small and medium businesses in Queensland, particularly those below but approaching the tax-free threshold. Payroll taxes increase compliance costs of small businesses, diverting crucial resources away from business operations and discouraging small businesses from creating additional jobs.

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Recommendations  

  • Queensland employment must be supported by raising the payroll tax threshold while the payroll tax rate is increased for large employers to stimulate employment in Queensland.
  • Lift the payroll tax threshold from $1.1 million to $1.5 million to create approximately 2,600 direct jobs in the 2019-20 budget year.
  • Re-commit to the payroll tax exemption for wages paid to apprentices and trainees.
  • Continue with the 50% apprentice and trainee rebate for payroll tax.

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