31 March 2025
Eligibility for regional payroll tax rate
The State Revenue Office has recently clarified the eligibility criteria for the reduced payroll tax rate that regional employers can access under the Payroll Tax Act 2007.
To explain what Regional Victoria means in this context, the Payroll Tax Act references section 18(8) of the First Home Owner Grant and Home Buyer Schemes Act 2000, which provides a specific definition.
Regional Victoria is:
“The municipal districts of the municipal councils listed in Schedule 1 below.”
The annual payroll tax-free threshold from 1 July 2024 to 30 June 2025 is $900,000, with a monthly threshold of $75,000. The payroll tax rate is 4.85%, except for employers in regional Victoria, where the rate is approximately 1.22%.
To qualify, a business must:
1. Pay at least 85% of its total taxable wages to employees classified as regional employees (those who perform more than 50% of their work in regional Victoria).
2. Meet this 85% threshold on an annual basis (not necessarily every month).
Key considerations:
- The location of work, not the employer's registered office, determines eligibility.
- Remote work arrangements are assessed based on where employees physically perform their duties.
- To substantiate claims, businesses must keep accurate records, such as payroll reports, work location logs, and employment contracts.
- Businesses uncertain about eligibility are encouraged to seek a private ruling from the State Revenue Office.
For more details, visit the State Revenue Office Victoria: sro.vic.gov.au.
Schedule 1—Municipal councils in regional Victoria
