Payroll tax grouping, explained

If your accountant has said the words “grouping rules” and you’re not sure what that means for your tax bill, this is the short version: related businesses can be treated as one taxpayer, sharing a single threshold instead of each getting their own. That single change is one of the most common reasons a business ends up owing more payroll tax than expected.

Why grouping exists

Without grouping rules, a business owner could split one operation into several smaller companies purely to give each one its own tax-free threshold, avoiding payroll tax altogether despite total wages being well above it. Every Australian state and territory uses broadly harmonised grouping provisions to prevent this. The provisions look at ownership, control and how staff are actually used, not just how a business is structured on paper.

The main grouping tests

Related corporations. If one company is a subsidiary of another under the Corporations Act, they’re grouped automatically.

Common control. If the same person, or the same small group of people, controls more than 50% of two or more businesses — through shareholding, voting rights, or the ability to appoint directors — those businesses are grouped, regardless of legal structure.

Common employees. If employees of one business perform duties for another business (even informally, even unpaid), the two businesses can be grouped on that basis alone.

Tracing of interests. Revenue offices can look through trusts, family members and related entities to find indirect common ownership that wouldn’t be obvious from a company register.

What grouping does to your threshold

A grouped entity does not get its own threshold. Instead, the group is assessed as if it were a single employer: one threshold, apportioned across the group’s combined wages in each state the same way an individual business’s threshold is apportioned across states it pays wages in (see our interstate apportionment guide). Typically only one member — the designated group employer — actually claims the threshold on a return, but every member remains liable for the group’s total payroll tax if it goes unpaid.

Toggle grouping on in the calculator below and enter your group’s combined wages to see the effect directly.

Frequently asked questions

What does it mean for businesses to be "grouped" for payroll tax?

Grouping means two or more businesses are treated as one taxpayer for payroll tax purposes. Instead of each business getting its own tax-free threshold, the whole group shares a single threshold, and every member is jointly and severally liable for the group's total payroll tax.

What triggers grouping?

The most common triggers are: related corporations under the Corporations Act (e.g. a parent and its subsidiaries), businesses under common control (the same person or people control more than 50% of each business), use of common employees (staff work across more than one business), and tracing of interests through related entities and family members. Each state applies broadly similar tests, based on similar model legislation.

If I'm grouped, do I lose my threshold entirely?

No — the group as a whole still gets one threshold, apportioned the same way an ungrouped business's threshold would be if it paid wages interstate. What changes is that the threshold is shared among every group member rather than given to each individually. In practice this usually means significantly less combined tax-free wages than if the businesses were assessed separately.

Can a group apply for exclusion?

In some circumstances a business can apply to its revenue office to be excluded from a group, typically by showing the businesses operate independently of each other despite meeting a grouping test. This is a formal application assessed case by case — it is not something a calculator can determine for you.

Does this calculator determine whether my businesses are grouped?

No. Grouping is a legal determination based on your specific ownership, control and staffing arrangements. This tool only calculates the payroll tax impact once you tell it whether grouping applies — for the determination itself, talk to your accountant or the relevant revenue office.