Sales agents for a real estate business use their personal vehicles to meet with vendors and buyers.
To compensate agents, they are paid a fixed weekly car allowance of $300. The allowance is in addition to other remuneration, such as superannuation, leave loading and sales commissions. The business does not require the agents to keep track of their business kilometres travelled.
Revenue Ruling PTA 025 outlines how car allowances paid to real estate sales agents can be treated for payroll tax. Where no records of business kilometres are kept, the formula of 250km × exempt rate can be used to determine the exempt portion of a car allowance.
Using this approach for the 2019-20 financial year, only $130 of the weekly allowance ($300 minus $170) paid to each agent is liable for payroll tax.
A real estate business employs several licenced sales agents, auctioneers and property managers. In addition to its employees, they engage four sales agents as contractors, who are referred to as internal conjunction agents.
Each of these agents employ another person to perform general administration and reception work which includes bookkeeping, paying invoices, filing documents and answering calls.
The real estate agency claims the services performed by two or more people exemption and excludes the commissions paid to all four agents from their payroll tax returns.
Although each of the four internal conjunction agents employ another person to perform work, only one agent employs a registered salesperson and is an exempt contractor for the exemption claimed.
Revenue Ruling PTA 023 clarifies the ‘person(s) must be engaged by the contractor to perform the work which is the object of the contract’. General administrative and reception work is not the object of a real estate sales or internal conjunction contract. Therefore, the commissions should be declared for the other three agents as liable for payroll tax.