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Northern Territory will implement a two-tier payroll tax system effective July 1, 2026. Employers and payroll tax groups with Australia-wide wages of AUD 100 million or more will pay 6.5%, while the standard 5.5% rate remains for all other employers. The AUD 2.5 million annual threshold, existing deductions, and grouping rules remain unchanged. Employers must apply the appropriate rate in monthly returns based on expected annual wages, with reconciliation through the annual adjustment process.
Northern Territory Introduces Two-Tier Payroll Tax System from July 1, 2026
The Northern Territory will implement a two-tier payroll tax system effective July 1, 2026, introducing a 6.5% rate for large employers while maintaining the existing 5.5% rate for all others. Employers and payroll tax groups with Australia-wide wages of AUD 100 million or more in a financial year will be subject to the higher rate, while the AUD 2.5 million annual threshold and existing deduction settings remain unchanged.
Who Is Affected
The 6.5% rate applies to:
- Employers with Australia-wide wages of AUD 100 million or more in a financial year
- Employers in a payroll tax group where the group's combined Australia-wide wages reach or exceed AUD 100 million in a financial year
For grouped employers, the threshold test applies at the group level under existing grouping rules in Part 5 of the Payroll Tax Act 2009. An individual employer may be liable at the higher rate even if its own Australia-wide wages fall below AUD 100 million, provided the group's combined wages meet or exceed that threshold.
What's Changing
| Element | Before July 1, 2026 | From July 1, 2026 |
|---|---|---|
| Payroll tax rate (all employers) | 5.5% | 5.5% for employers/groups with Australia-wide wages below AUD 100 million |
| Payroll tax rate (large employers) | 5.5% | 6.5% for employers/groups with Australia-wide wages of AUD 100 million or more |
| Annual threshold | AUD 2.5 million | AUD 2.5 million (unchanged) |
| Grouping rules | Part 5 of Payroll Tax Act 2009 | Part 5 of Payroll Tax Act 2009 (unchanged) |
The higher rate applies during the financial year based on expected Australia-wide wages, not only at year-end. Employers must apply the appropriate rate in monthly returns, with reconciliation through the annual adjustment process in the June annual return.
Where section 84 of the Payroll Tax Act 2009 requires separate calculation for a relevant period—such as when an employer joins or leaves a group, or ceases paying wages in Australia—each relevant period is assessed separately against the AUD 100 million threshold. Unlike the deductible amount, this threshold is not prorated.
What NEO Partners and Clients Should Do
- By June 2026: Determine whether your Australia-wide wages (or group combined wages) will reach AUD 100 million in the 2026-27 financial year
- From July 2026: Apply the appropriate rate (5.5% or 6.5%) in monthly payroll tax returns based on expected annual wages
- Throughout 2026-27: Monitor wage levels during the year and adjust monthly returns if expectations change
- June 2027: Reconcile any overpayment or underpayment through the annual adjustment in the June annual return
Sources
- Northern Territory Treasury, Territory Revenue Office: Payroll changes from 1 July 2026
