The nexus provisions determine which state or territory payroll tax is paid. Our flowchart may assist you in establishing liability using these provisions.
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 usually located, the location where services are wholly 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.|
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.
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:
If the corporate employee has more than one PPB in a month, the PPB is the address on the last day of that month.
If the employee does not 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:
If the employer has more than one PPB in a month, the PPB is the address on the last day of that month.
Payroll tax is payable in the state or territory where the wages are paid or payable if:
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 does not have a PPR in Australia, and the employer does not have an ABN address or PPB in Australia during October.
The employee performs services and is renumerated for this in:
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.
Payroll tax is payable in NSW when services were mainly performing in NSW during the month if:
Services are mainly performed in NSW if the actual time worked in NSW is more than 50 per cent during the month.
Wages are taxable in NSW when paid or payable to an employee who has performed services wholly overseas 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.
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 does not have to be within one financial year.
It will not be considered a break of continuity of service if they return to Australia:
The period of continuous service overseas is ended if the employee returns to Australia in any other circumstance. A new period of continuous services starts again on the date the employee recommences performing services 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.
When calculating the value of wages in foreign currency, we will accept an exchange rate conversion based on:
For more information, read Revenue Ruling PTA 039.