If your business is connected to another entity—even slightly—you could be grouped for payroll tax in Queensland. Learn how grouping works and how to avoid nasty surprises.
Why You Might Owe Payroll Tax Without Realising It
You’ve kept your wages under $1.3 million, you’re confident you’re under the threshold… but then a letter from the Queensland Revenue Office (QOR) lands in your inbox.
You’ve been grouped.
Suddenly, you’re liable for payroll tax—not just on your business’s wages but combined with other companies you’re linked to.
Welcome to the world of Queensland payroll tax grouping rules—where even small connections between businesses can lead to major tax obligations.
The good news? Once you understand the rules, you can manage the risk. In this post, we’ll explain:
- What payroll tax grouping is (in plain English)
- The five ways entities can be grouped
- Real-world traps and client examples
- What to do if you’ve been grouped unfairly
- How to apply for a de-grouping exemption
Let’s dig in. Because when it comes to payroll tax grouping rules, ignorance isn’t bliss—it’s expensive.
🧠 What Are Payroll Tax Grouping Rules?
Payroll tax grouping rules allow the QRO to treat two or more businesses as a single group for payroll tax purposes. This means:
- Wages paid by all entities in the group are aggregated
- The $1.3 million threshold applies to the group—not each business individually
- Only one deduction applies across the group
- Each entity becomes jointly and severally liable for the tax of the entire group
Translation: if one company in the group can’t pay, the others are on the hook.
🔍 Why Do Grouping Rules Exist?
The rules were designed to stop businesses from artificially splitting operations to avoid payroll tax.
But here’s the problem: the grouping net is wide.
Even genuine, independent businesses can get caught.
A simple shared director, Staff, loan, or even office space arrangement can be enough.
🧩 The Five Ways Businesses Are Grouped
Payroll Tax Grouping Triggers in Queensland
The QRO can group entities based on any one of these five factors.
Common Control
If the same person or group controls multiple entities, they can be grouped.
- Owning over 50% of shares
- Controlling voting power
- Appointing directors
Even discretionary trusts can be included—based on who benefits and who controls the trustee.
Common Employees
If you have staff who work across two businesses, the entities may be grouped.
This happens a lot in family businesses. For example, Mum runs the café, Dad runs the catering arm, and the kids work for both.
Common Financial Arrangement
This is a big one. If one business finances or guarantees another’s debts, they may be grouped.
Even things like:
- Loans between entities
- Shared bank accounts
- Co-signing for leases or finance
These can all trigger grouping.
Common Direction and Control
If two businesses are run by the same people, even if they don’t share ownership, they could be grouped.
This often catches partnerships and trusts managed by the same individual.
Use of Common Premises or Facilities
If multiple businesses share the same space or systems, they can be grouped.
For example:
- Same business address
- Shared equipment or software
- Answering the phone for both companies
This one’s especially tricky for home-based businesses or family setups.
🧨 Real-World Trap: The Family Group Example
I worked with a client who owned a building business. His wife ran a separate cleaning business, and his adult son had a landscaping company.
All three operated independently. Different clients, different branding, even separate accounting files.
But…
- They all worked from the same premises
- They shared a bookkeeper
- Staff occasionally swapped between businesses
Conclusion: The businesses are all Grouped.
The combined wages pushed them over the $1.3M threshold—and they faced back taxes, interest, and penalties. It was a nasty shock.
🚩 What Happens When You’re Grouped
Once you’re grouped:
- The deduction reduces for the group as wages increase
- Each member is jointly and severally liable
- You may need to register for payroll tax immediately
- Penalties and interest apply if you don’t
Here’s the kicker:
Grouping is automatic. There’s no “approval” process. You could be grouped without even knowing it.
💡 Can You Get Out of Being Grouped?
Yes—you can apply for a de-grouping exemption.
How to Apply for a Payroll Tax De-grouping Exemption
The QRO may approve a de-grouping application if you can prove:
- Each business operates independently
- There’s no intent to avoid tax
- The connection is administrative only (e.g., shared family name or office)
You’ll need to provide:
- Org charts
- Contracts showing separate operations
- Accounting records
- Statutory declarations
It’s not an easy process—but if your businesses are genuinely separate, it’s worth fighting for.
📚 Record Keeping: Protect Yourself
If you believe your businesses should not be grouped:
- Maintain separate financial records
- Use different staff (as much as possible)
- Avoid inter-entity loans or guarantees
- Operate from distinct locations if feasible
- Ensure clear branding and websites for each business
Keeping these boundaries visible makes it easier to defend your position.
🧠 Common Myths About Grouping
Debunking Grouping Rule Misunderstandings
- “I don’t control both businesses.”
QRO looks beyond legal ownership—practical control matters too. - “My accountant didn’t say anything.”
The rules are complex—and often overlooked. If in doubt, get a second opinion. - “They’re just a hobby business.”
Doesn’t matter. If the grouping conditions are met, you’re in. - “We only share office space, not clients.”
Still groupable under “shared premises.”
⚠️ What QRO Is Watching in 2025
The Queensland Revenue Office has increased its audit focus in 2025, especially on:
- Family-run business groups
- Professional services firms
- Construction and trades
- Businesses with related trusts and companies
They’re using ATO data-matching and behavioural analytics to identify hidden group structures.
📞 What to Do If You’re Worried About Grouping
If you’re not sure whether you’re grouped—or should be—it’s best to get advice early.
You might need to:
- Register for payroll tax
- Apply for a de-grouping exemption
- Fix past non-compliance via voluntary disclosure
QRO offers penalty reductions for businesses who come forward before being audited.
Need help with that process? We’ve got your back.
👋 Next Steps: Don’t Get Caught Off Guard
If you’re not 100% sure whether your businesses could be grouped now’s the time to find out.
✅ Book a meeting with us for a risk review:
👉 Schedule a consult with Janelle
🔗 For more official info, visit:
QRO Grouping Guide: https://qro.qld.gov.au/payroll-tax/grouping
