The Accountants

One-Off Payments and Payroll Tax in Queensland, New South Wales, and Victoria

Introduction

One-off payments, such as bonuses, ex gratia payments, redundancy payments, and special allowances, are common in many businesses. However, employers often overlook the payroll tax implications of these payments. Payroll tax applies to more than just regular wages—many one-time payments are also considered taxable wages under payroll tax laws in Queensland (QLD), New South Wales (NSW), and Victoria (VIC).

This article explains how one-off payments are treated for payroll tax, when exemptions apply, and how businesses should report these payments.

Are One-Off Payments Subject to Payroll Tax?

✅ Yes, most one-off payments are subject to payroll tax in QLD, NSW, and VIC.

Taxable One-Off Payments Include:

• Bonuses (e.g., performance-based, retention, sign-on bonuses).
• Ex gratia payments (voluntary goodwill payments to employees).
• Lump-sum back payments (e.g., wage adjustments).
• Severance or termination payments (except for exempt redundancy components).
• Long-service leave payouts.
• Special allowances (e.g., COVID-19 support payments to employees).

Non-Taxable One-Off Payments (Exemptions May Apply):
❌ Genuine redundancy and early retirement scheme payments (exempt components only).
❌ Workers’ compensation payments.
❌ Reimbursements for business expenses.
❌ Certain hardship payments (if approved by the state revenue office).

State-Specific Payroll Tax Rules for One-Off Payments

If a business’s total taxable wages—including one-off payments—exceed the payroll tax threshold, it must report and pay payroll tax accordingly.

How to Report One-Off Payments for Payroll Tax

One-off payments must be reported in the payroll tax return for the month in which they are paid.

✅ Include one-off payments in the taxable wage total for payroll tax calculations.
✅ Classify payments correctly (e.g., termination payments vs. redundancy).
✅ Maintain accurate records to support any exemption claims.

Example Calculation:
A business in NSW has:

• Regular wages: $1.1 million
• A one-off bonus payment: $150,000

Total taxable wages = $1.25 million → Exceeds NSW’s $1.2M threshold → Payroll tax is payable on $50,000 at 5.45%.

Exemptions for One-Off Payments

Some one-off payments are partially or fully exempt from payroll tax.

✔ Genuine Redundancy & Early Retirement Payments

• The tax-free portion of a genuine redundancy payment (based on ATO guidelines) is exempt from payroll tax.
• Any amount above the ATO tax-free limit is taxable.

✔ Workers’ Compensation Payments

• Compensation payments made under approved workers’ compensation schemes are exempt from payroll tax.

✔ Expense Reimbursements

• If an employer reimburses an employee for a business-related expense (e.g., travel, training), the amount is not taxable.

Common Mistakes Employers Make

❌ Failing to report one-off bonuses in payroll tax calculations.
❌ Misclassifying redundancy payments, leading to tax overpayment.
❌ Not tracking wage adjustments and lump-sum back payments.
❌ Assuming that all severance payments are exempt.

Conclusion

One-off payments are often subject to payroll tax, and employers must ensure they correctly classify and report these payments. While some exemptions exist (e.g., redundancy and workers’ compensation), most bonuses, ex gratia payments, and lump sums are taxable.

To stay compliant, businesses should:
✔ Review one-off payment classifications carefully.
✔ Keep detailed records of payments and exemptions.
✔ Seek professional advice if dealing with complex payroll tax issues.

The Team at The Accountants and The Finance Brokers are here to help you navigate your cash flow requirements in your business. We offer complimentary cash flow reviews and assist you in understanding your finance needs.