|Ruling number||PTA 008|
|Date issued||12 July 2007|
|Issued by||Tony Newbury|
Chief Commissioner of State Revenue
|Effective from||1 July 2007|
From 1 July 2000, the supply of most goods and services became subject to the Commonwealth’s Goods and Services Tax (the GST). The GST has relevance to payroll tax because certain supplies which are subject to the GST are also subject to payroll tax. These include the supply of labour services by contractors and agency supplied staff.
Section 44 of the Act provides that GST will be excluded from wages (other than wages that comprise fringe benefits) in circumstances where a payment for a supply of services is taken to be wages under the Act and that payment includes an amount of GST.
This revenue ruling explains how the GST impacts on the calculation of an employer’s liability for payroll tax.
Employees’ wages and salaries are not subject to GST. Consequently, there is no impact for payroll tax purposes.
An employer can exclude the GST component from those payments to contractors which are taken to be taxable wages under the Act.
An employment agent can exclude the GST component from payments to service providers (onhired workers) which are taken to be wages under the Act.
With effect from 1 July 2007, the value of a fringe benefit for payroll tax purposes is the value determined by grossing up the aggregate fringe benefits amount using the formula for Type 2 benefits specified under the Fringe Benefits Tax Assessment Act 1986 (FBT Act). The value of a fringe benefit may or may not include GST depending on the valuation rules applicable under the FBT Act. Where the value so determined includes GST, the GST amount is also included in the value for payroll tax purposes.
Please note that rulings do not have the force of law. Each decision made by the Office of State Revenue is made on the merits of each individual case having regard to any relevant ruling.