South Australian payroll tax liability for wages paid by an employer

Status: Replaced on 28 June 2010 by Information Circular - View Current Version
Version Number: 1
Legislation: Payroll Tax Act 2009
Date Issued: 1 July 2009

Revenue Rulings do not have the force of law.

Preamble

The Payroll Tax Act 2009 (the “Act”), which commenced on 1 July 2009, rewrote and repealed the Pay-roll Tax Act 1971 and provides fully harmonised legislation with New South Wales, Victoria, Tasmania and Northern Territory.

The purpose of this Revenue Ruling is to clarify the circumstances when wages must be declared in South Australia for payroll tax purposes and to clarify the liability for wages paid for services performed in another country (or countries).

Ruling

Payroll tax is payable when an employer’s total Australian wages exceed the tax-free threshold (deduction amount). Australian wages comprise South Australian wages and all interstate wages. South Australian wages are the wages subject to tax under the Act. Interstate wages are those wages subject to tax in the other states and territories under their equivalent payroll tax legislation.

To determine whether the wages paid or payable in respect of each monthly return period are subject to South Australian payroll tax, 2 factors need to be considered:

  • the place where the wages are paid or payable; and
  • the place where the services are performed.

As there are several possible combinations of these factors, employers may experience difficulty in determining their payroll tax liability where wages are paid or payable by employers outside South Australia, or where wages are paid in respect of work performed outside South Australia.

Wages are deemed to be paid at the place of receipt by the employee.

The following table shows the circumstances in which wages are taxable in South Australia. It is important to note that the liability for South Australian payroll tax must be considered separately for each calendar month.

Place where wages are paid or payable

Place where services are performed during the calendar month

In South Australia

Wholly or partly in South Australia

In South Australia

In 2 or more states and/or territories other than South Australia

In South Australia

Wholly in another country (or countries) on an assignment of less than 6 continuous months

In South Australia

Partly interstate & partly in another country (or countries)

In South Australia

Wholly or partly outside any state or territory (as defined under the respective payroll tax legislation of the relevant state or territory) but not in another country

In another state and/or territory

Wholly in South Australia

Outside Australia

More than 50% performed in South Australia

In circumstances other than those shown above, the wages are not taxable in South Australia but may be taxable in another state or territory.

Where an employee is working outside any state or territory, but not in another country, the wages are taxable under the Act if they are paid in South Australia. Employees working on an oil rig would not be considered as working in another country unless the oil rig is physically located in another country.

Employees working in another country

Where services are performed by an employee in another country whose wages are paid in South Australia, the following points need to be considered:

  • wages are exempt if the employee has worked in another country for a continuous period of more than 6 months (i.e. the exemption from payroll tax applies for the whole assignment, including the first 6 months);
  • the 6 month period does not have to be within the one financial year but must be a continuous period;
  • where an employee, working in another country, returns to Australia in the following circumstances, it will not be considered to be a break in continuity:
    • for a holiday; or
    • to perform work exclusively related to the overseas assignment for a period of less than one month.
and the employee immediately returns to that country to perform further work on the assignment.

Please refer to Revenue Ruling PTA002 entitled Expatriate Employees for further details on employees working in another country.

View this Revenue Ruling as a PDF (PDF 288 KB)

Previous Versions

View Circular No. 296 South Australian Payroll Tax liability for wages paid by an employer (PDF 470KB)