As the Australian Capital Territory (ACT) introduces major payroll tax reforms over 2026-2027, franchise businesses operating there face new compliance challenges and opportunities for careful planning. These changes are especially significant for franchises with large or multi-location wage bills, as they require updated payroll systems and strategic management to stay compliant and cost-effective.
Key Payroll Tax Changes
Phase 1: Effective 1 January 2026
The first phase builds on surcharges introduced in July 2025 by adding a flat rate for the largest employers.
- Wages more than $50m but not more than $100m: 6.85% general rate plus 0.5% surcharge.
- Wages more than $100m but not more than $150m: 6.85% general rate plus 1.0% surcharge.
- Wages exceeding $150m: flat rate of 8.75% (no surcharge).
Phase 2: Effective 1 July 2026
The second phase replaces surcharges with a fully progressive rate structure, plus threshold and base rate changes.
- Threshold Reduction: Drops from $2.0 million to $1.75 million.
- Wages $1.75m to $20m: 6.75%.
- Wages $20m to $50m: 6.85%.
- Wages $50m to $100m: 7.35%.
- Wages $100m to $150m: 7.85%.
- Wages exceeding $150m: 8.75%
These changes directly affect franchise businesses, particularly larger enterprises or those part of national franchise groups whose aggregated wages push them into higher tax brackets.
Franchise-Specific Considerations
Franchise businesses often have unique payroll complexities, including multiple franchise locations, varying employment levels and group wage aggregation rules that impact payroll tax liability. This means that franchises with Australia-wide wage totals above key thresholds will see different tax rates applied, making clear visibility and control over payroll data essential.
This means that compliance risks are heightened. Small errors in wage aggregation or misapplication of surcharges can lead to costly penalties and reputational risk. Accurate and automated payroll processing backed by industry expertise is vital to navigate these reforms smoothly.
How Managed Payroll Services Benefit Franchises
Managed payroll providers like iWS, with strong franchise industry experience, provide payroll technology, automation, and specialist support that help businesses maintain accurate payroll data and stay compliant with changing regulations. Their systems automate award interpretation and payroll calculations, while reporting and insights assist clients in meeting their payroll tax and compliance requirements.
Leveraging a managed payroll partner reduces administrative burden, improves visibility into labour costs and supports informed decision-making as businesses adapt to evolving payroll tax rules.
Preparation for the ACT payroll tax changes can protect franchises from unexpected costs and compliance pitfalls, while supporting efficient workforce management and financial planning.
