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  • Nexus provisions
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Nexus provisions

The nexus provisions determine which state or territory payroll tax is paid. Our flowchart helps you establish liability using these provisions.

Where services are performed wholly in one state or territory

If services in a month are performed wholly in one state or territory, payroll tax is payable in that location. If an employee has wholly provided services in a place other than where they're usually located, the location where services are performed is taken to be where payroll tax is liable.

An employee normally performs their duties in NSW. In May, they went to Queensland for a temporary assignment and performed all their services in Queensland that month. Wages paid to the employee in May are liable for payroll tax in Queensland.

Where services are performed in more than one state or territory, and/or partly overseas

If services are performed in a month in more than one state or territory, or overseas, the nexus provisions provide a four-tiered test to determine location of payroll tax liability. The test must be applied in sequence.

Employee's principle place of residence (PPR)

Payroll tax is payable in the state or territory where the employee’s PPR is located in that month.

If the employee has more than one PPR in that month, the employee’s PPR on the last day of that month is the one taken to be the PPR.

In the instance were a corporation is deemed to be an employee, the corporation’s PPR is taken to be the state or territory where:

  • its ABN address is located
  • where its principle place of business (PPB) is located (if it doesn't have an ABN address or two ABN addresses).

If the corporate employee has more than one PPB in a month, the PPB is the address on the last day of that month.

Employer’s ABN address or principle place of business (PPB)

If the employee doesn't have a PPR in an Australian state or territory during that month, payroll tax is payable where the employer’s ABN address is located.

Payroll tax is payable in the state or territory where the employer’s PPB in Australia, if:

  • they don't have an ABN address
  • they have two or more ABN addresses in different states or territories.

If the employer has more than one PPB in a month, the PPB is the address on the last day of that month.

Where wages are paid or payable 

Payroll tax is payable in the state or territory where the wages are paid or payable, if:

  • the employee doesn't have a PPR in Australia
  • the employer doesn't have an ABN address or PPB in Australia.

When wages are paid or payable in a number of states and/or territories, payroll tax is paid on the aggregate of the wages in the state or territory where the largest portion of wages is paid.

An employee doesn't have a PPR in Australia, and the employer doesn't have an ABN address or PPB in Australia during October.

The employee performs services and is renumerated for this in:

  • NSW $200
  • Victoria $300
  • South Australia $1,000.

The tax is payable on the total amount of $1,500 in South Australia, since that is where the largest portion of wages was paid.

Services performed mainly in NSW

Payroll tax is payable in NSW when services were mainly performed in NSW during the month, if:

  • the employee doesn't have a PPR in Australia
  • the employer doesn't have an ABN address or PPB in Australia
  • wages are not paid in any Australian state of territory.

Services are mainly performed in NSW if the actual time worked in NSW is more than 50 per cent during the month.

Employment overseas

Employees working overseas for less than six continuous months

Wages are taxable in NSW when paid or payable to an employee who has performed services wholly overseas for up to six months continuously.

If only part of the wages earned by the expatriate employee is paid in NSW and the remaining part is paid overseas, the wages paid in NSW must be declared for payroll tax.

If the wages earned by the expatriate is paid in more than one state or territory, payroll tax is payable on the aggregate of the Australian wages in the state or territory where the largest portion of wages is paid.

Employees working overseas for more than six months 

Wages paid in NSW are exempt from payroll tax if the employee has performed services wholly overseas for a continuous period of more than six months (inclusive of the wages paid for the first six months of services).

The six-month period doesn't have to be within one financial year.

It won't be considered a break of continuity of service if they return to Australia:

  • for a holiday
  • to perform services exclusively related to the overseas assignment for a period of less than one month.

The period of continuous service overseas is ended if the employee returns to Australia for any other circumstance. A new period of continuous services starts again on the date the employee recommences performing services overseas.

Services performed offshore, not overseas

Wages paid in NSW for services performed outside of any state or territory are taxable in NSW irrespective of the assignment duration.

If the wages are paid in more than one state or territory, payroll tax is payable on the aggregate of wages, where the largest proportion is paid.

As the services are not performed overseas, the exemption for services provided overseas for a continuous period of more than six months does not apply.

Wages paid in a foreign currency 

When calculating the value of wages in foreign currency, we'll accept an exchange rate conversion based on:

  • the Reserve Bank of Australia’s daily rate published on the day of payment, or
  • the ATO’s yearly average for the financial year.

For more information, read Revenue Ruling PTA 039.

Payroll tax assist

Use payroll tax assist to help you meet your payroll tax obligations. It'll show you what wages are taxable.

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