This is a State tax paid by employers on the wages of employees (at the rate of 5.75%) provided that the wages paid by the employer exceed the pay-roll tax threshold of $456 000 per annum ($38 000 per month). 'Wages' includes wages, salary, commission, bonuses or allowances paid by an employer to an employee. Certain employers are exempt from paying payroll tax; these include public benevolent institutions, non-profit hospitals and some classes of schools and children's services.

From 1 July 2002 the pay-roll tax threshold will rise to $504,000 and the rate will be reduced to 5.67%.