Payroll Q&A – Are council subsidiaries exempt from payroll tax?

The payroll tax legislation of some states allows an exemption for the subsidiaries of councils. Does this exemption exist in Queensland payroll tax legislation?

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S. 14(2)(e) in Division 2 of Payroll Tax Act 1971 (the Queensland Payroll Tax Act) allows exemption from payroll tax for wages paid

‘by a local government, except to the extent that those wages are paid or payable—

  1. for or in connection with; or
  2. for or in connection with the construction of any buildings or the construction of any works or the installation of plant, machinery or equipment for use in or in connection with;

electricity generation, distribution or supply, water supply, sewerage, the conduct of transport services (including ferries), of abattoirs, of public markets, of parking stations, of quarries, of cemeteries, of picture theatres, of milk supply, of hostels, of hotels or of bakeries or of any other activity that is a prescribed activity’

Would you please advise whether the payroll tax exemption is extended to council subsidiaries?


The Payroll Tax Act 1971 (the Queensland Payroll Tax Act) doesn’t specifically extend the exemption in s. 14(2)(e) to subsidiaries of local governments. However, the subsidiary may be exempt under other exemptions as outlined below.

S. 13J(2) of the Queensland Payroll Tax Act provides an exemption for employment agents that have clients that are payroll exempt

‘(2) However, subsection (1) does not apply to an amount, benefit or payment mentioned in the subsection if—

  1. the amount, benefit or payment would be exempt from payroll tax under division 2, other than section 14(2)(j), (k) or (l) or 14A, if it had been paid or provided by the client in relation to the service provider as an employee; and
  2. the client has given the employment agent a declaration, in the approved form, that subsection (1) does not apply to the amount, benefit or payment.’

The ‘approved form’ mentioned in the legislation can be found on the Queensland Government website: Form OSR – P9 Employment agency contracts – declaration by exempt client.

Public Ruling PTA028 states:

‘Wages paid by local government (local councils) are exempt from payroll tax under Part 2, Division 2 of the Payroll Tax Act, except for wages for or related to certain activities that are outlined in s.14(2)(e) of the Payroll Tax Act. Consequently, an employment agent is exempt from payroll tax on wages to workers on-hired to local councils if the workers are not engaged in the activities listed in s.14(2)(e) of the Payroll Tax Act.’

Based on the above logic, where a local council’s subsidiary on-hires workers to the council, then wages paid to that worker will be payroll tax exempt (as long as they aren’t engaged in the activities s. 14(2)(e) of the Payroll Tax Act 1971).

It is also worth considering whether a local council’s subsidiary is payroll tax exempt in its own right. For example, the subsidiary may be exempt as a not-for-profit charitable institution. The structure and objects of the subsidiary should be considered with consideration of other Queensland payroll tax exemption categories.

We note that other state payroll tax legislation does provide exemptions for subsidiaries of local councils. It may be worthwhile calling Queensland Office of State Revenue to confirm that there is no administrative position allowing payroll tax exemption for a council subsidiary. However, we are not aware of any such administrative position.

Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.