Status: Replaced on 28 June 2010 by Information Circular 11 - 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.
The Payroll Tax Act 2009 (the “Act”), which commenced on 1 July 2009, rewrote and repealed the Pay-roll Tax Act 1971 and provides fully harmonised legislation with New South Wales, Victoria, Tasmania and Northern Territory.
One of the areas that has been harmonised is in relation to the liability for wages paid for services performed in another country.
Whether wages of an employer are subject to the payment of payroll tax in South Australia will depend upon where the work is performed by an employee and where the payment is received by an employee.
Employers who have expatriate employees should be aware that wages which include a wide variety of payments made to these employees, may be subject to payroll tax where payments are received in South Australia in relation to employees working overseas or payments are received overseas by employees working in South Australia.
The purpose of this Revenue Ruling is to clarify an employer’s liability under Section 10 of the Act in respect of wages paid to expatriate employees.
Expatriate employees working overseas
Assignment for less than 6 months
Wages received in South Australia by an expatriate employee who is working in another country, or countries, are taxable where the assignment in another country, or countries, is no more than 6 continuous months.
If only part of the wages earned by an expatriate employee working in another country or countries are received in South Australia, then such wages must be declared for payroll tax.
Assignment for greater than 6 months
Where services are performed by an employee on a continuous assignment in another country or countries for greater than 6 months, any wages received in South Australia are not subject to payroll tax (i.e. the exemption from payroll tax on such wages 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, it will not be considered to be a break in continuity in the following circumstances:
- the employee returns for a holiday; or
- the employee returns to perform work exclusively related to the overseas assignment for a period of less than one month.
and in either case, the employee immediately returns to that overseas country to perform further work on the assignment.
Services performed offshore
Any wages that relate to services performed offshore and beyond the limits of any Australian state or territory, but not in another country, are taxable if they are received in South Australia irrespective of the duration of the assignment. As such the exemption that applies to wages received in South Australia for work performed in another country is not applicable.
Expatriate employees working within South Australia or paid in South Australia
It is common practice for overseas parent companies to send employees to work for their South Australian subsidiaries or branches on a permanent or temporary basis. Wages paid to such persons in South Australia are subject to payroll tax in South Australia in any calendar month where the employee works wholly or partly in South Australia. Wages paid in another state or territory are subject to payroll tax in South Australia in any calendar month where the employee works wholly in South Australia.
Wages paid outside Australia are subject to payroll tax in South Australia in any calendar month where the employee works mainly in South Australia.
Where the expatriate employee receives his/her wages in South Australia but works in 2 or more states or territories other than South Australia in a calendar month, such wages are taxable in South Australia.
Although the basis for determining whether payments made, or benefits provided, to expatriates are subject to payroll tax is essentially the same as applies to other wage payments, the following clarifications are provided:
View this Revenue Ruling as a PDF (PDF 311 KB)
View Circular No. 160 Expatriate employees (PDF 461KB)