Australia operates a three-tier tax system: federal (Commonwealth), state and territory, and local government. The Australian Taxation Office (ATO) administers federal taxes — income tax, GST, and superannuation — on behalf of the Commonwealth. Each state and territory runs its own revenue authority and collects taxes on property, employment, insurance, motor vehicles, and gambling. For property investors, small business owners, and employers, state taxes can represent a significant cost that varies considerably depending on where you operate.
The Three Tiers of Australian Tax
| Level | Key taxes | Administered by |
|---|---|---|
| Commonwealth | Income tax, company tax, GST, CGT, FBT, excise | Australian Taxation Office (ATO) |
| State/Territory | Stamp duty, land tax, payroll tax, insurance duty, motor vehicle duty | State revenue authorities |
| Local government | Council rates | Local councils |
Unlike income tax — which is identical whether you live in Darwin or Melbourne — state taxes differ materially across jurisdictions. A property investor in Victoria faces land tax rates and thresholds different from one in Queensland. A business paying $1.5 million in wages has no payroll tax liability in South Australia but a significant one in Victoria.
State Revenue Authorities
| State/Territory | Revenue authority | Website |
|---|---|---|
| New South Wales | Revenue NSW | revenue.nsw.gov.au |
| Victoria | State Revenue Office (SRO VIC) | sro.vic.gov.au |
| Queensland | Queensland Revenue Office (QRO) | qro.qld.gov.au |
| Western Australia | WA Department of Finance | finance.wa.gov.au |
| South Australia | RevenueSA | revenuesa.sa.gov.au |
| Tasmania | State Revenue Office TAS | sro.tas.gov.au |
| Australian Capital Territory | ACT Revenue Office | revenue.act.gov.au |
| Northern Territory | NT Revenue | treasury.nt.gov.au |
The Major State Taxes
Stamp Duty (Transfer Duty)
Stamp duty is a one-off tax on the transfer of property (and some other transactions). It is the largest state tax for most individuals and is payable when buying a home or investment property. Rates are progressive and vary significantly by state. See the Mortgages stamp duty guides for state-by-state calculators.
Land Tax
An annual tax on the unimproved value of land you own (excluding your principal place of residence in most states). Land tax disproportionately affects property investors, who pay it on every investment property above the relevant threshold. See Land Tax Australia — State-by-State Guide.
Payroll Tax
An employer tax on wages paid above a state-set annual threshold. It does not apply to individuals or sole traders with no employees. See Payroll Tax — Complete Guide.
Insurance Duty
A tax on general insurance premiums — built into the cost of home, car, and business insurance policies. Rates are typically 9–10% of the premium. See Insurance Duty Australia.
Motor Vehicle Stamp Duty
A duty paid when registering a new or used vehicle, calculated as a percentage of the vehicle’s purchase price or market value. See Motor Vehicle Stamp Duty by State.
Gambling and Betting Taxes
States tax gambling operators on their gross gambling revenue. These taxes are significant revenue sources but do not directly affect most consumers.
GST Revenue Distribution — The Horizontal Fiscal Equalisation System
GST revenue collected by the Commonwealth is distributed back to the states and territories under a system called Horizontal Fiscal Equalisation (HFE), administered by the Commonwealth Grants Commission. The goal is to give each state the capacity to deliver services at a comparable standard, regardless of differences in revenue-raising capacity and service delivery costs.
The distribution is not equal per capita. States with lower revenue-raising capacity (e.g., smaller populations, fewer mining royalties) or higher costs of service delivery receive a larger per-capita share. This arrangement has been a recurring source of tension — particularly for Western Australia, which historically received a disproportionately small share relative to its GST contribution during the mining boom period.
Why State Tax Matters for Property Investors and Employers
For individuals, the most significant state tax encounter is typically stamp duty when buying a property — which can be tens of thousands of dollars. For ongoing property investors, land tax is a recurring annual cost.
For businesses, payroll tax is the major state tax concern. A business operating across multiple states must register in each state where it has a payroll tax liability — there is no single national registration.
Understanding which state imposes which taxes, and at what rates, is essential for investment and business decisions.
Related Articles
- Best State for Tax in Australia
- Land Tax Australia — State-by-State Guide
- Payroll Tax Australia — Complete Guide
- Insurance Duty Australia
- Motor Vehicle Stamp Duty by State
- State and Territory Tax hub
- Taxes hub
Frequently Asked Questions
Does the ATO administer state taxes? No. State and territory taxes are administered by each jurisdiction’s own revenue authority — not the ATO. The ATO administers federal taxes only (income tax, GST, FBT, super). If you have a stamp duty or land tax query, contact the relevant state revenue office.
Do I pay state taxes if I live in the ACT or NT? Yes. The ACT and NT have their own revenue authorities and impose their own taxes, including stamp duty, land tax (ACT), and payroll tax. The ACT has been progressively replacing stamp duty with a broad-based land tax (rates) over a 20-year transition.
Are state taxes deductible for income tax purposes? It depends. Land tax and council rates on investment properties are generally tax-deductible as rental property expenses. Payroll tax is deductible as a business expense. Stamp duty on property purchase is not immediately deductible — it is added to the cost base of the property for CGT purposes.
This article provides general tax information. State and territory tax rules change with each state budget. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.