Payroll Tax for Residential Builders in the NT

What it is

Payroll tax in the Northern Territory is a tax on wages. It is administered by the Territory Revenue Office under the Payroll Tax Act 2009 (NT). Employers register and lodge through INTRA, the Territory online revenue system.

The NT scheme is harmonised with the states on wages, contractors, grouping and nexus. Two things differ and both matter to a builder. The NT tax-free entitlement is the largest in the country. And it is a deduction that shrinks as wages grow, not a fixed slab that always carves off the first 2.5 million dollars.

The deduction and how it phases out

The maximum tax-free entitlement is 2.5 million dollars a year, or $208,333 a month. It rose from 1.5 million dollars on 1 July 2025.

Once total Australian wages go above 2.5 million dollars, whether the employer is on its own or in a group, the maximum tax-free entitlement reduces by $1 for every $2 of wages above that point. At 7.5 million dollars a year, or $625,000 a month, the entitlement is gone and every dollar of NT taxable wages is taxed.

The effective rate on wages between 2.5 million and 7.5 million dollars is therefore higher than the headline rate. A builder who reads the 2.5 million dollar figure as a permanent tax-free slab will underpay.

The rate

The rate is 5.5 per cent. From 1 July 2026 a rate of 6.5 per cent applies to employers, and members of payroll tax groups, with Australia-wide wages of 100 million dollars or more. The test is applied at group level, so a member with modest wages of its own can still be taxed at 6.5 per cent if the group crosses the line.

Returns and the annual adjustment

• Registration is required in the month following the month in which wages first exceed $208,333
• Returns are generally monthly. Tax is payable by the 21st of the month following the return period
• TRO may approve an annual return where the estimated liability is $10,000 or less a year
• There is no June monthly return. June sits inside the annual adjustment return, due 21 July
• INTRA sets the fixed monthly deductible amount for the coming year by dividing the prior year annual deductible amount by 12. A builder expecting growth should update the estimate in INTRA rather than absorbing a large true-up in July

What counts as wages

Salary and wages, overtime, commissions, bonuses, allowances, superannuation, fringe benefits, director fees, termination payments, unused leave and the taxable part of contractor payments. From 1 July 2025 wages paid to eligible apprentices and trainees are exempt, which is a real saving for a builder carrying apprentices.

Contractors

The NT applies the harmonised relevant contract model. Nearly every payment to a tradesperson starts life as a relevant contract. A payment leaves the tax base only where an exclusion applies. The main ones are:

• The contractor engaged and paid others, employees or their own subbies, to help complete the contract
• The contractor supplied services for fewer than 90 days in the financial year
• The contractor worked more than 90 days but averaged 10 days or less in each month worked for the builder
• The services were needed on a one-off basis, or only occasionally and for fewer than 180 days in the year
• The labour component of the contract was less than half its total value
• The contractor is an owner-driver who only delivers, and does not install

Where none of those apply, the taxable amount is the invoice, less GST, less a contractor deduction that varies by trade between 5 per cent and 37 per cent, plus any superannuation entitlement of a sole-trader contractor and any taxable allowances or benefits. A labourer engaged as a contractor gets no contractor deduction at all. Everything except GST is wages.

Exclusions are not apportioned. If a contract is partly for excluded services and partly not, the whole contract is taxable.

Why this bites builders

TRO publishes a worked example of a building company with 30 PAYG employees, wage and super costs of 2.4 million dollars a year, just under the tax-free entitlement, and roughly 1.2 million dollars a year in payments to carpenters, bricklayers, painters, plasterers and concrete finishers. It had never registered for payroll tax.

TRO picked up the subcontractor payments through its data sharing arrangements with the ATO, investigated three years back and found that around half of those payments were taxable wages. The assessment came to $180,000, plus a standing obligation to register and lodge monthly.

What to do about it

Add the labour component of subcontractor payments to the wages ledger before deciding you sit under the entitlement. Map every related entity and treat them as one group, because grouping under Part 5 of the Payroll Tax Act 2009 combines wages and leaves one entitlement across the lot. Keep the exclusion evidence with the contract, and update the INTRA estimate when the wage bill moves.