Workers' compensation payments
Status: Current (this version reflects the introduction of the Return to Work Act 2014 which repealed the Workers Rehabilitation & Compensation Act 1996)
Version Number: 2
Legislation: Payroll Tax Act 2009
Date Issued: 14 June 2016
Revenue Rulings do not have the force of law.
The Payroll Tax Act 2009 (the “Act”), which commenced on 1 July 2009, rewrote and repealed the Pay-roll Tax Act 1971 and provides fully harmonised legislation with New South Wales, Victoria, Tasmania and Northern Territory.
The definition of taxable wages under the Act generally includes the amount shown as gross wages on an employee’s payment summary. However, employers are sometimes uncertain whether payments of workers’ compensation are taxable.
The purpose of this Revenue Ruling is to clarify how workers’ compensation payments are treated for payroll tax purposes.
Payments of compensation made in accordance with the Return to Work Act 2014 are not subject to payroll tax. This is the case whether or not the payment to the worker is made by the employer or the insurer.
However, compensation paid to incapacitated workers, in excess of the amount prescribed by the Return to Work Act 2014 (this means, ‘make-up pay’) will be subject to payroll tax.
View this Revenue Ruling as a PDF (PDF 216KB)