Australian businesses cross state lines for all kinds of reasons — a remote hire, a new warehouse, a contract win in another capital city. Each of those crossings can trigger registration obligations in a state your business has never operated in before. State revenue offices and Workcover regulators don't communicate with each other; an employer who looks fully compliant in their home state can be operating illegally in another and not know until the assessment arrives.
This guide covers what changes when your business has employees, contractors or fixed presence in more than one state — payroll tax, Workcover, grouping — and the avoidable mistakes that turn into six-figure regularisation projects.
Payroll tax: the thresholds that matter
Payroll tax is state-administered, and every state has its own threshold, rate and grouping rules. A business may sit comfortably below threshold in its home state but cross it instantly when adding a remote employee in another. Worse, related entities are grouped — even if they look independent on paper.
The 2025–26 thresholds and rates, at a glance:
- QLD — A$1.3M annual threshold, 4.75% rate (4.95% above A$6.5M; mental-health levy above A$10M).
- NSW — A$1.2M annual threshold, 5.45% rate.
- VIC — A$1M annual threshold (lifted from A$900K on 1 July 2025), 4.85% rate. Regional employers attract 1.2125%. Mental health and wellbeing surcharge above A$10M.
- SA — uses a deduction-based model. A$600K deduction tapers from full at A$1.5M of Australia-wide wages to A$0 by A$1.7M. Rate is 1.48% in the taper band and 4.95% above A$1.7M. Substantially different from the other states.
- WA — A$1M annual threshold, 5.5% rate. Diminishing-threshold deduction applies between A$1M and A$7.5M; higher tier rates above A$7.5M and A$100M.
Our payroll tax calculator covers all five states with current 2025–26 figures — useful as a first pass on what each state would owe before grouping comes into the picture.
The interstate wages rule (the part most owners miss)
Payroll tax is calculated state-by-state on wages paid in that state, but the threshold you get in each state is reduced based on your Australia-wide wages. If your Australia-wide wages exceed a state's threshold, you get a proportional share of that state's threshold based on the wages paid in that state, not the full threshold.
Practical example: a business pays $1.5M in wages in NSW and $300K in QLD. The NSW threshold is $1.2M and the QLD threshold is $1.3M. The business is over threshold in NSW and would intuitively expect no QLD liability (since QLD wages are below $1.3M). But because total Australian wages are $1.8M, the QLD threshold available is reduced: roughly $1.3M × ($300K / $1.8M) = $216K. The QLD payroll tax is then 4.75% on ($300K − $216K) = $84K, which is around $3,990 of QLD tax that would have been zero on a pure-state reading.
Workcover: not optional, not the same anywhere
Workers compensation is mandatory in every state your business has employees, including remote workers. The schemes are different in each jurisdiction, the premium calculation methods are different, and the annual declaration deadlines do not line up.
- QLD — WorkCover Queensland is the single scheme; employers must hold a WorkCover policy or self-insurer licence. Annual wage declaration and premium adjustment.
- NSW — icare administers the scheme. Premiums have been frozen for 18 months under the December 2025 agreement; reforms passed in November 2025 and February 2026 are progressively taking effect from July 2026.
- VIC — WorkSafe Victoria. Employer excess is the first 10 days of weekly payments and $876 medical excess for physical-only injury claims in 2025/26. All workplace injuries must be recorded in a workplace injury register within 48 hours and kept for at least 5 years.
- SA — ReturnToWorkSA. Premium calculated annually based on prior wages and industry rate.
- WA — Multiple licensed insurers; employers choose a provider but coverage is mandatory.
The single biggest mistake we see: businesses register for payroll tax in a new state but forget Workcover. A remote employee in Sydney working for a Brisbane company without NSW Workcover coverage means the employer is personally liable for any workplace injury — the kind of exposure that ends businesses.
Grouping provisions: the silent expansion
If your trust, family company and operating entity share common ownership, the payroll tax authorities will likely group them. Combined wages count against a single threshold. Many owners find out about grouping after the assessment lands.
A grouping applies when a person or persons together have a controlling interest— more than 50% — in two or more businesses. Common control includes:
- Related companies under section 50 of the Corporations Act 2001 (holding companies and their subsidiaries).
- Common ownership — the same person or set of persons own more than 50% of multiple businesses.
- Common directors who control more than 50% of the board votes.
- Shared employees — staff who genuinely work across two or more businesses can trigger a grouping even without ownership overlap.
- A trust as common employer — a service trust used for staff across multiple operating companies.
Once grouped, wages are combined for threshold purposes. A grouping designates one entity as the “designated group employer” (DGE) that absorbs the threshold; the other group members pay tax on every dollar of wages. De-grouping is possible by application to the relevant state revenue office, but it requires demonstrating genuine independence — not just clean paperwork.
We have managed payroll tax and Workcover compliance simultaneously across QLD, NSW, VIC, SA and WA for businesses scaling fast. The pattern of expansion is always the same — and the surprises are almost always avoidable with quarterly reviews instead of annual ones.
The five mistakes we see most often
- Hiring across a state line without registering for that state's payroll tax.Registration is not optional once you cross threshold. State revenue offices share data with the ATO; back-assessments of 3–5 years are common, plus interest and penalty tax.
- Treating contractors as “not in scope”. Many contractors are deemed employees for payroll tax purposes under the relevant contract provisions. The test is broader than the ATO's general contractor test, and varies by state. Don't assume the ABN means out-of-scope.
- Missing the grouping provisions when running a family/operating-company structure.The classic trap: an operating company hires staff, a service trust holds the office lease, and a holding company owns both. All three get grouped. Threshold is shared, not multiplied.
- Reading thresholds as static. Rates and thresholds shift, sometimes mid-year (the VIC threshold lifted from A$900K to A$1M on 1 July 2025). State budgets update them annually around May–June.
- Leaving Workcover declarations to year-end. If wages data is messy at year-end, the declaration is wrong, and the premium adjustment penalty in the following year is painful. A quarterly Workcover wages reconciliation prevents this entirely.
The quarterly review we run with multi-state clients
We work to a fixed quarterly multi-state checklist with affected clients:
- Reconcile this quarter's wages by state of employment (the state where work was performed, not where the employee was hired)
- Project the next quarter's wages based on hiring plans and identify whether a new state registration is triggered
- Check for any contractor payments that should be re-classified as deemed-employee wages
- Confirm Workcover registrations cover every state with current employees
- Review the grouping position — did any structural changes this quarter affect the group?
- Update the 13-week cash flow forecast with the next quarter's payroll tax and Workcover lodgements
For businesses with employees in three or more states, this is a quarterly conversation. For businesses with one or two interstate hires, an annual review is usually sufficient unless headcount changes.
Where to start
If you have employees in more than one state and you are not 100% certain you are registered in every state where required, the discovery call is the right place to start. We'll walk through your current footprint, identify gaps, and scope the regularisation. Voluntary disclosure to a state revenue office is almost always cheaper than waiting for the audit letter — but the conversation needs to be quick.
References: Revenue NSW, Queensland Revenue Office, State Revenue Office Victoria, RevenueSA, WA Department of Treasury — payroll tax rates and thresholds 2025–26. Revenue NSW Commissioner's Practice Note 009 (Payroll tax grouping). icare NSW, WorkSafe Victoria, WorkCover Queensland, ReturnToWorkSA, WorkCover WA — 2025/26 employer obligations. Always confirm current figures with your state revenue office or a registered BAS Agent before lodging.
This information is general in nature and does not constitute personal financial or tax advice. Please contact us to discuss your individual circumstances. Tax laws are subject to change; information on this page reflects legislation in effect as of April 2026.