Since 1 July 2019, Queensland has recognised a 1% discount on the applicable payroll tax rate for regional employers (Discount). The Discount was originally enacted to end on 30 June 2023 but it was extended for a further seven years, until 30 June 2030.
Employers intending to claim the Discount need to be cognisant of the technical requirements to access the Discount, to ensure the concession is properly being claimed. The Queensland Revenue Office (QRO) can (and often does) conduct reviews and audits of taxpayers to verify claims for exemptions and concessions, including the Discount.
Regarding the Discount, there are two key eligibility conditions:
- the employer has a ‘principal place of employment’ in ‘regional Queensland’;
- the employer pays at least 85% of taxable wages to ‘regional employees’.
Earlier this year, a further condition was inserted to exempt large employers. For the 2025 and later financial years, employers with annual Queensland taxable wages of more than $350 million are not eligible.
Principal place of employment
For employers with an Australian Business Number (ABN), this first condition hinges entirely on whether the employer’s registered ABN business address is located within the ABS statistical areas for Cairns, Townsville, Mackay, Central Queensland, Darling Downs Maranoa, Isaac, Whitsunday, Wide Bay or Queensland – Outback.
Accordingly, it is critical that employers regularly update their ABN records (which often is not a priority), in addition to any addresses listed with ASIC. If ABN records are inaccurate, issues can arise in seeking to make retroactive amendments to ensure that eligibility for the discount is maintained.
This can be an issue if an employer’s ABN address has been inputted as their head office or accountant’s address in South-East Queensland rather than their principal place of business in regional Queensland. In this regard, the ATO and ABR websites both acknowledge it is not uncommon for addresses listed for ABN purposes to be out of date, and that these need to be current places of business.
85% of payments to regional employees
The second condition is that 85% of payments are paid to employees whose principal place of residence is located in regional Queensland (i.e. the areas set out above).
The requirement should apply on an entity-by-entity basis notwithstanding that entities may otherwise be grouped for payroll tax purposes.
Employers should implement systems to ensure this 85% requirement is satisfied each year. Payments to employees each year must be cross-checked to postcodes of employees, to ensure at least 85% of payments are to regional employees.
Whether this criterion is satisfied may be impacted where:
- business operations have changed, involving more employees in South-East Queensland;
- workers are engaged on a fly-in fly-out (FIFO) basis;
- a workplace may be in regional Queensland, but workers travel from an ineligible area to work in the workplace
Assistance
We can assist you with undertaking an independent review to ensure the regional employer discount is properly being claimed. Alternatively we can also assist in making voluntary disclosures of any potential shortfalls and/or liaising with the QRO as part of a QRO review or investigation, to help ensure any QRO concerns are satisfactorily answered.
For more information contact Lyndon Garbutt or DJ Alexander, on the contact details listed above.
