If I receive a government wage subsidy, do I still pay payroll tax on the full wage?

Yes. All three states' rulings state plainly that the source of funds used to pay wages is not relevant to your payroll tax liability — the full gross wage paid to the employee remains taxable regardless of any subsidy received.

Does JobKeeper history still matter for current payroll tax returns?

Only if you're dealing with an old return from the 2020–2021 period when JobKeeper operated. The scheme has ended and its exemption doesn't apply to any current wages. If you're amending a historical return from that period, the top-up exemption rules from that time still apply to it specifically.

Are apprentice hiring subsidies the same as apprentice wage exemptions?

No, and this is a common point of confusion. A hiring subsidy an employer receives doesn't reduce taxable wages, under the general wage-subsidy rule. Whether the apprentice's wage itself is exempt is a separate question that differs by state — see our guide to what counts as wages.

Does a state-based hiring incentive reduce my payroll tax bill?

Not directly. Receiving an incentive payment doesn't change the gross wages figure you report — the same wage-subsidy principle applies regardless of which government program the payment comes from.

Do I need to report subsidy amounts separately on my payroll tax return?

The subsidy itself isn't a payroll tax concept — it's a separate payment to your business, not to your employee. Your payroll tax return reports the gross wages you actually paid; keep subsidy records separately for whatever program administers the payment.

Are wage subsidies taxable wages for payroll tax purposes

Written by Cross State Payroll teamPublished 10 August 2026Last reviewed 14 August 2026

Short answer: no. Receiving a wage subsidy doesn’t reduce the payroll tax you owe on the wages that subsidy helped fund. This is one of the more consistent rules across all three states — and one of the more counterintuitive ones, because it feels like subsidised wages should be treated more gently.

The rule, stated identically in three states

NSW, VIC and QLD all publish the same harmonised ruling on wage subsidies, sharing near identical numbering and wording — Revenue NSW’s version is PTA010, issued 13 September 2007 and effective from 1 July 2007; Victoria’s is Revenue Ruling PTA-010; Queensland’s is Public Ruling PTA010.2. Victoria’s text puts the principle plainly: “the full amount of gross wages paid or payable to employees is subject to payroll tax” when a subsidy has been received, and “the source of the funds used to pay wages to employees is not relevant in determining the payroll tax liability.” Queensland’s ruling uses almost identical wording. In other words: payroll tax looks at what you paid your employee, not where the money to pay them came from.

This applies whether the subsidy comes from a state or federal government authority, and regardless of the scheme name — an apprenticeship incentive payment, a hiring subsidy, or any similar program. The underlying logic is that the employer-employee relationship, and the wage actually paid under it, is what payroll tax taxes — a subsidy changes who bears the economic cost of that wage, not what was legally paid.

Worked example: why the arithmetic doesn’t work the way it feels like it should

Take a hypothetical business that pays an employee $80,000 in gross wages for the year, and separately receives $20,000 from a government wage subsidy program toward that same employee’s cost. The intuitive assumption is that the business’s “real” wage cost was only $60,000, and payroll tax should follow that net figure. It doesn’t. The taxable wages figure for that employee remains $80,000 — the full amount actually paid to them — regardless of the $20,000 the business separately received. The subsidy is, functionally, a completely separate transaction from the business’s perspective for payroll tax purposes: it’s income to the business, not a reduction to the wage paid to the employee.

JobKeeper — a historical exception, for context

The one well-documented departure from this principle was JobKeeper, the temporary federal wage subsidy that ran during 2020–2021 and has since ended. Revenue NSW’s guidance on this (still published, for historical reference) explains that only the “top-up” component — the gap between the JobKeeper payment and what an employee would otherwise have earned — was exempted, and only where their ordinary wage was lower than the JobKeeper amount. Where an employee was stood down entirely, the full JobKeeper payment was exempt. Where their ordinary wage already met or exceeded the JobKeeper rate, the wage remained fully taxable regardless of the subsidy. This exemption no longer applies to any current wages — it’s relevant only if you’re dealing with an old return from that period, for example if you’re responding to a reassessment or audit that touches on 2020–2021 wages.

The reason JobKeeper worked differently from the general wage-subsidy rule is that parliament legislated a specific, time-limited exemption for it — the general PTA010-style ruling didn’t change; a separate, narrower carve-out was layered on top for that specific scheme, for that specific period. That’s a useful way to think about any future scheme, too: unless a specific exemption is legislated for it by name, assume the general wage-subsidy rule applies and the full wage remains taxable.

Even within the JobKeeper period, the exemption was narrower than businesses sometimes assumed. Revenue NSW’s practice note draws a specific line: the exemption applied only to the wage component actually covered by the top-up mechanism described above. Superannuation contributions, fringe benefits, and employee share scheme interests provided to a JobKeeper-subsidised employee were never exempt, even during the scheme — they remained fully taxable wages the whole time, calculated the same way they would be for any other employee. That distinction is exactly the kind of detail that’s easy to miss when working from a general recollection of “JobKeeper wages were exempt from payroll tax” rather than the specific, narrower rule that was actually in place.

A separate question: are apprentice and trainee wages exempt?

This is a genuinely different issue from the subsidy question, and the states don’t agree with each other on it. See our full breakdown in what counts as wages — in short, QLD exempts apprentice and trainee wages outright (plus a rebate on top), NSW taxes them but offers a rebate, and VIC taxes them unless the apprentice is employed through a recognised Group Training Organisation. None of that turns on whether you’re also receiving a government incentive payment for hiring the apprentice — that’s the subsidy question above, and the answer to that one is the same everywhere: it doesn’t reduce your taxable wages.

Common mistakes business owners make here

Reporting net-of-subsidy wages. The most direct version of the mistake — reducing the reported wage figure by the subsidy amount received.
Conflating the subsidy question with the apprentice exemption question. They’re governed by entirely different rules, and one is harmonised across states while the other genuinely isn’t.
Assuming a new scheme automatically gets JobKeeper-style treatment. JobKeeper’s exemption existed because it was specifically legislated, not because wage subsidies generally get favourable treatment. Don’t assume a new program carries the same carve-out unless it’s explicitly confirmed.
Treating the subsidy as a payroll record rather than a business income record. Keep the two separate in your bookkeeping — one feeds your payroll tax return, the other doesn’t.

How this compares across NSW, VIC and QLD

This is one of the few areas covered on this site where the states are genuinely, precisely aligned rather than just broadly similar — the wage-subsidy ruling is shared almost verbatim across all three, down to the operative sentence. The contrast with the apprentice wage exemption question sitting right next to it — where NSW, VIC and QLD each take a different approach — is a useful reminder that harmonisation in Australian payroll tax is real but partial: some rules are identical, some rules share a structure but differ in detail, and some are genuinely different by design.

What to do next

Calculate payroll tax on full gross wages paid to employees, not net-of-subsidy figures.
Check apprentice/trainee-specific exemptions or rebates separately in your state — that’s a different rule from the subsidy question.
Keep records of subsidy receipts separate from your payroll tax working papers, since they serve different purposes.
If you’re amending an old JobKeeper-period return, get advice given that exemption’s specific historical conditions.
Run your actual gross wage figures — subsidised or not — through the comparison calculator to see your estimated liability.

Frequently asked questions

If I receive a government wage subsidy, do I still pay payroll tax on the full wage?: Yes. All three states' rulings state plainly that the source of funds used to pay wages is not relevant to your payroll tax liability — the full gross wage paid to the employee remains taxable regardless of any subsidy received.
Does JobKeeper history still matter for current payroll tax returns?: Only if you're dealing with an old return from the 2020–2021 period when JobKeeper operated. The scheme has ended and its exemption doesn't apply to any current wages. If you're amending a historical return from that period, the top-up exemption rules from that time still apply to it specifically.
Are apprentice hiring subsidies the same as apprentice wage exemptions?: No, and this is a common point of confusion. A hiring subsidy an employer receives doesn't reduce taxable wages, under the general wage-subsidy rule. Whether the apprentice's wage itself is exempt is a separate question that differs by state — see our guide to what counts as wages.
Does a state-based hiring incentive reduce my payroll tax bill?: Not directly. Receiving an incentive payment doesn't change the gross wages figure you report — the same wage-subsidy principle applies regardless of which government program the payment comes from.
Do I need to report subsidy amounts separately on my payroll tax return?: The subsidy itself isn't a payroll tax concept — it's a separate payment to your business, not to your employee. Your payroll tax return reports the gross wages you actually paid; keep subsidy records separately for whatever program administers the payment.