When are wages subject to payroll tax in South Australia?
The nexus provisions determine in which Australian jurisdiction a payroll tax liability arises.
The nexus provisions only affect circumstances where employees provide services in more than one Australian jurisdiction or partly in more than one Australian jurisdiction and partly overseas in a calendar month. Where an employee provides services wholly in one Australian jurisdiction, payroll tax will continue to be paid in the jurisdiction where those services are performed.
The nexus provisions provide a 4 tiered test to determine a payroll tax liability where the employee provides services in more than one Australian jurisdiction and/or partly overseas. This test is as follows:
- Payroll tax is payable in the jurisdiction where the employee’s principal place of residence is located.
- If an employee does not have a principal place of residence in any Australian jurisdiction during the relevant month, payroll tax is payable in the jurisdiction where the employer has registered their Australian Business Number (ABN) address.
If the employer does not have a registered ABN address, or has 2 or more ABN addresses in different jurisdictions, payroll tax is payable in the jurisdiction where the employer has their principal place of business.
- If the employee does not have a principal place of residence in any jurisdiction and the employer does not have an ABN address or principal place of business in any Australian jurisdiction, payroll tax is payable in the jurisdiction where the wages are paid or payable in that calendar month.
If wages are paid by the employer into an employee’s bank account, the wages are deemed to be paid in the jurisdiction in which the employee holds their bank account. If wages are paid or payable in a number of jurisdictions, payroll tax is paid in the jurisdiction where the largest proportion of the employee’s wages is payable.
- If both the employee and employer are not based in any Australian jurisdiction and wages are not paid in Australia, a payroll tax liability arises in South Australia if the services are mainly performed in South Australia (including South Australian coastal waters) in that calendar month (that is, the work performed in South Australia during that month is greater than 50%).
See Revenue Ruling PTA039: Payroll Tax Nexus Provisions for further information.
Employees working in another country for 6 months or less
Where an employee is working in another country or countries for a period of 6 months or less, a payroll tax liability arises in South Australia if the wages are paid or payable in South Australia.
Employees working in another country for more than 6 months
If an employee is working in another country or countries for a continuous period of more than 6 months, then the wages paid or payable to that employee for the whole period will be exempt from payroll tax. In these circumstances, the 6 month period need not be within the same financial year, but must be a continuous period.
Should an employee that is working in another country return to Australia, it will not be considered to be a break in continuity of their overseas employment if the employee returns to Australia under the following circumstances:
- for a holiday; or
- to perform work exclusively related to the overseas assignment for a period of less than one month.
In either case, the employee must immediately return to that country or another country to continue their overseas employment.
Services performed offshore
Where an employee is working outside all Australian jurisdictions, but not in another country, the wages are taxable in the Australian jurisdiction in which the wages are paid or payable. The exemption available for employees working in another country or countries would not apply in this circumstance.
Wages paid for services performed offshore, but within the territorial (coastal) limits of South Australia are liable for payroll tax and must be included in your payroll taxable wages.
For payroll tax purposes, South Australia’s coastal border is taken to be the ‘mean low watermark baseline’ which is the territorial seas that follows the low watermark of South Australia’s mainland and islands and deviates offshore across river mouths and bays if less than 24 nautical miles in width.
Shares and options
Where wages comprise the grant of a share or option, the payroll tax liability (for the grant of a share or option) is also governed by the new nexus rules.
See the definition of wages section for more information on shares and options.
However, certain circumstances relating to shares and options attract different nexus rules. These are outlined as follows:
- The employee performs services in more than one Australian jurisdiction and/or partly overseas, and the employee does not have a PPR in an Australian jurisdiction, and the employer does not have a registered business address or a PPB in an Australian jurisdiction and the shares/options relate to an Australian company.
- The employee performs services wholly outside all Australian jurisdictions for less than 6 months but is paid in an Australian jurisdiction.
In these situations, where the grant of a share or option constitutes wages, the shares or options are taken to be paid or payable in the jurisdiction where the Australian company is registered.
See Revenue Ruling PTA039: Payroll Tax Nexus Provisions for further guidance on the application of the nexus provisions.
Definition of wages
Having established the circumstances in which wages are taxable in South Australia, it is necessary to consider what constitutes ‘wages’.
The definition of ‘wages’ in the Payroll Tax Act 2009 is broad and is not restricted to wages or salaries.
The term ‘wages’ includes:
- salaries and wages;
- employment termination payments and accrued leave paid on termination;
- fringe benefits;
- shares and options;
- employer-funded (pre-income tax) superannuation contributions including non-monetary contributions;
- salary sacrifice; and
- any remuneration paid to or in relation to company directors or members of the governing body (for example, directors’ fees).
This list is not exhaustive.
See the checklist of taxable items section for further guidance on the types of payments that are subject to payroll tax.
Payments to on-hired employment agency workers or relevant contractors may also be taxable.
See the contractors and employment agency contract sections for more information.
If you are uncertain on whether a particular class of worker or payments made to them is subject to payroll tax please contact RevenueSA.
‘Wages’ do not have to be paid directly by an employer to an employee in order to be taxable. Payments to a person other than an employee, or payments by a person other than the employer, are subject to tax where the payments are made in relation to an employee’s services. For example, an entertainment allowance paid to an employee’s spouse is taxable as it is a payment to a third party in relation to the employee’s services.
Wages & salaries
Taxable wages and salaries are the gross wages and salaries paid including any Pay-As-You-Go (PAYG) withholding amounts or other deductions made by an employer on behalf of an employee. Taxable wages include such payments as overtime pay, penalty payments, sick pay, holiday pay and leave loadings.
Goods & Services Tax (GST)
Payroll tax is not payable on the Goods and Services Tax (GST) component that may arise in payments to employees or deemed employees.
Annual, sick & long service leave payments
Annual leave, sick leave and long service leave payments made to an employee who will be continuing in the service of their employer and payments made in lieu of accrued annual, sick, long service or pro-rata leave at termination of employment, are liable to payroll tax where any such payment represents a reward for service to which the employee has a pre-existing enforceable right.
Payments relating to accrued leave entitlements are liable to payroll tax, whether paid on, before or after termination of the employee’s services.
Similarly, any payment of deferred or accrued wages, salaries, commissions, bonuses, allowances, etc. is liable to payroll tax whenever paid.
There is no exemption in respect of payments made to an employee who is on jury duty.
As a general rule, allowances are taxable in full even if they are paid to compensate an employee for an expense which may be (or has been) incurred in relation to work (for example, uniform allowances). This is the case even if an allowance is paid under an award or employment agreement (for example, overtime meal allowances).
See Revenue Ruling PTA005: Exempt Allowances for further information.
The only exceptions to the general rule that allowances are taxable in full are motor vehicle allowances, accommodation allowances and living away from home allowances.
Motor vehicle allowances
A motor vehicle allowance paid or payable to an employee is taxable only to the extent that it exceeds the exempt rate per kilometre, or an amount calculated as the exempt component. The exempt component is calculated as follows:
E = K x R
E is the exempt component
K is the number of business kilometres travelled during the financial year
R is the exempt rate
The number of business kilometres travelled during the financial year is determined by either:
- a continuous recording method during the financial year;
- the Australian Taxation Office (ATO) 12-week averaging method; or
- some other method the Commissioner may approve in writing.
If the number of business kilometres is not recorded via one of the methods described above, the full allowance will be taxable.
The exempt rate is aligned with the rate determined by the Federal Commissioner of Taxation for the previous financial year (the rate used in 2022-23 is the Australian Taxation Office 2021-22 rate).
For 2022-23, the motor vehicle allowance exempt rate for payroll tax purposes is $0.72 per kilometre.
See the rates and thresholds page for previous exempt rates.
Where a motor vehicle allowance is paid as a set allowance (rather than on a cents per kilometre basis), the taxable amount is the amount by which the set allowance exceeds the amount calculated by multiplying the actual kilometres travelled by the prescribed rate.
See Revenue Ruling PTA005: Exempt Allowances for further information.
The exemption of a prescribed portion of a motor vehicle allowance payment applies only where the travelling allowance is paid or payable for business travel purposes using a motor vehicle supplied by the employee.
See Revenue Ruling PTA025: Motor Vehicle Allowance Paid to Real Estate Salespersons for information on motor vehicle allowances paid to real estate salespersons.
An accommodation allowance paid or payable to an employee is taxable only to the extent that the allowance exceeds the exempt rate. Wages do not include an accommodation allowance that does not exceed the exempt rate.
The exempt rate for payroll tax purposes is based on the related Australian Taxation Office figure, and is the total reasonable amount for daily travel allowances using the lowest capital city for the lowest salary band for the financial year.
For 2022-23, the accommodation allowance exempt rate for payroll tax purposes is $289.15 per night (Room $147.00, Incidentals $21.30, Meals $120.85).
See the rates and thresholds page for previous exempt rates.
The exemption applies only where the accommodation allowance is designed to compensate an employee for accommodation and directly related meal expenses necessarily incurred where an employee is required, in the course of employment, to be absent overnight from their usual place of residence.
See Revenue Ruling PTA005: Exempt Allowances for further information.
See Revenue Ruling PTA024: Overnight Accommodation Allowances Paid to Truck Drivers for information on accommodation allowances paid to truck drivers.
Living away from home allowances
A living away from home allowance is paid to compensate an employee for additional expenses they may incur as a result of being required to temporarily live away from home in order to perform their duties of employment. This usually occurs where the employee has been required to work temporarily at another location, which necessitates a temporary change in residence. The allowance will include components designed to compensate for additional food and accommodation costs. It is distinguishable from a travel allowance which is paid to an employee to compensate for accommodation, meals and incidental expenses incurred while the employee is travelling on a short-term assignment not involving a temporary relocation of the employee’s place of employment.
Generally, a living away from home allowance is a fringe benefit under Section 30 of the Fringe Benefits Taxation Assessment Act 1986 (Cwlth).
If the allowance falls within the definition of a living away from home allowance under Section 30 of the Fringe Benefits Taxation Assessment Act 1986 (Cwlth), the taxable value of the benefit under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth), grossed-up by the Type 2 factor as shown on the FBT Return is subject to payroll tax. However, if the allowance is not considered a living away from home allowance under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth), the treatment of the allowance for payroll tax purposes will be the same as the treatment of an accommodation allowance (see above).
Reimbursements of expenses incurred by employees on behalf of their employers are not taxable unless they have a taxable value under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth).
For a payment to be considered a reimbursement, it must have the following 2 characteristics:
- the expense must be incurred by the employee and the precise amount is reimbursed, or if the payment was made in advance, a receipt relating to the expense must be given to the employer along with any change; and
- the expense must be incurred in the course of the employer’s business.
If a payment does not have both characteristics, it is not considered a reimbursement and is generally taxable in full.
The Payroll Tax Act 2009 provides that certain payments made to an employee on termination of employment are subject to payroll tax. Specifically, the following payments are taxable:
- payments for actual services rendered up to the date of termination;
- accrued annual and long service leave; and
- employment termination payments.
Both accrued annual leave and long service leave payments are taxable when paid to an employee on termination of the employee’s services. It should be noted that leave payments paid to a continuing employee are also subject to payroll tax.
Employment termination payments
Payroll tax applies to an employment termination payment (formerly eligible termination payment), as defined in Section 82-130 of the Income Tax Assessment Act 1997 (Cwlth), when paid by an employer as a result of an employee’s termination.
The amount subject to payroll tax is the whole of the employment termination payment paid by the employer (whether paid to the employee or to a roll-over fund), less any component, which is exempt income when received by the employee. Employment termination payments paid by employers may include payments for:
- unused sick leave or rostered days off;
- ex gratia payments or ‘golden handshakes’;
- payment in lieu of notice or service contract payouts;
- compensation for loss of job or wrongful dismissal; or
- bona fide redundancy or early retirement payments in excess of the income tax free limit. (The income tax free components of such payments do not form part of an employment termination payment and are, therefore, not subject to payroll tax).
The definition of wages for payroll tax purposes includes any fringe benefits as defined in the Fringe Benefits Taxation Assessment Act 1986 (Cwlth).
Therefore, as a general rule, benefits that are taxable under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth) are also taxable under the Payroll Tax Act 2009 and must be declared as wages for payroll tax purposes. The only exception to this general rule is a tax-exempt body entertainment fringe benefit as defined in the Fringe Benefits Taxation Assessment Act 1986 (Cwlth). Although tax-exempt body entertainment fringe benefits are subject to fringe benefit tax, they are specifically exempt for payroll tax purposes.
If a benefit is exempt under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth) (for example, a laptop computer) it is also exempt from payroll tax. In addition, if a fringe benefit has a nil taxable value for fringe benefit tax purposes (for example, the taxable value is reduced to nil under the otherwise deductible rule), it also has a nil taxable value for payroll tax purposes.
Records used to substantiate fringe benefit tax claims made to the Australian Taxation Office are also acceptable for payroll tax.
Calculating the fringe benefit value
Under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth), fringe benefits are categorised into two types depending on the GST implications:
- Type 1 fringe benefits for which the employer can claim a GST input tax credit; and
- Type 2 fringe benefits for which the employer cannot claim a GST input tax credit.
The fringe benefit taxable value for payroll tax purposes is determined by grossing up all fringe benefits by using only the Type 2 factor.
Gross-up rates for fringe benefits are available on the Australian Taxation Office website.
Please note that the Australian Taxation Office requires that certain fringe benefits, referred to as the ‘reportable fringe benefits amount’, must be shown on the employee’s payment summary if the benefits amount exceeds $2,000. These reportable fringe benefits may not include the value of all fringe benefits provided to employees and is not necessarily the amount to be used for payroll tax purposes.
Declaring fringe benefit value
Employers are required to declare in their monthly returns the actual value of fringe benefits provided in each month. However, for administrative ease, past and present payroll tax legislation allows employers to formally elect to adopt an alternative method, whereby the amounts declared are based on the fringe benefit tax returns submitted to the Australian Taxation Office.
Where such an election is made, employers must include in each monthly payroll tax return from July to May, one-twelfth of the taxable value (for payroll tax purposes) of fringe benefits using the fringe benefit tax return for the year ending 31 March immediately preceding the start of each financial year. The annual reconciliation for each financial year will include the taxable value (for payroll tax purposes) of fringe benefits declared in the fringe benefit tax return ending 31 March immediately before the annual reconciliation.
Once an election is made, an employer will not be permitted to revert to declaring the actual value of fringe benefits in monthly payroll tax returns, unless the Commissioner gives approval in writing.
An employer must not use a combination of methods.
Share & options
The value of an employer’s contribution to any grant of a share or option to an employee or deemed employee, a director or former director, member or former member of the governing body of the company constitutes wages and is subject to payroll tax.
The granting of a share or an option occurs if a person acquires a share or, in the case of an option, a right to the share.
A value of the share or option becomes liable on the ‘relevant day’. The employer can elect to treat the relevant day as either the date that the share or option is granted to the employee, or the ‘vesting date’. Once an election is made in respect of a particular share or option it cannot be amended.
The vesting date for a share is the date when any conditions applying to the grant of the share have been met and the employee’s legal or beneficial interest in the share cannot be rescinded. The vesting date for a share is the earlier of either the date as defined above or the date at the end of 7 years from the date on which the share is granted to the employee.
The vesting date for an option is the earlier of either one of the three dates. The dates are:
- when the share to which the option relates is granted to the employee;
- when the right under the option to have the relevant share transferred, allotted or vested is exercised by the employee; or
- at the end of the period of 7 years from the date on which the option is granted to the employee.
If the granting of a share or option constitutes wages, the amount of the wages is the value of the share or option on the relevant day, less any consideration paid or given by the employee for the grant (excluding consideration in the form of services rendered). The value of a share or an option is the market value or the amount determined as provided for in Section 83A-315 of the Income Tax Assessment Act 1997 (Cwlth) and Division 83A of the Income Tax Assessment Regulations 1997 (Cwlth).
Start-up companies can use one of two ‘safe harbour’ methods for valuing unlisted shares. The ‘net tangible asset’ method and the ‘comprehensive value’ method. If a start-up company choses an alternative method resulting in a higher market value, we accept that value for payroll tax methods.
If an employer does not include the value of a grant of a share or option in its taxable wages for the financial year in which the grant occurred, the wages constituted by the grant are taken to have been paid or payable on the vesting date of the share or option.
The employer may reduce the taxable wages declared by the value of any previously declared share or option value, if the grant of a share or option was rescinded because the vesting conditions have not been met. However, this reduction in the taxable wages would not apply in circumstances where the employee decided not to exercise the option.
If the grant of a share or option is withdrawn, cancelled or exchanged before the vesting date for some valuable consideration (other than the grant of other shares or options), the date on which that occurs is deemed to be the vesting date and the taxable amount is taken to be the value of the consideration.
The 7 year vesting date still applies to shares and options that have been forfeited or lapsed prior to seven years from the grant date if the other specified events have not occurred for those cases where the employer has elected the vesting date as the relevant date. However, as such shares/options have been forfeited or lapsed prior to 7 years from the grant date, the value of the shares/options at the 7 year vesting date is regarded as being nil because the share/option does not exist at that time.
The definition of wages includes all employer-funded superannuation contributions.
Superannuation subject to payroll tax includes employer contributions paid or payable:
- to a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cwlth);
- as a superannuation guarantee charge within the meaning of the Superannuation Guarantee (Administration) Act 1992 (Cwlth);
- to or as a form of superannuation, provident or retirement fund or scheme, including to the Superannuation Holding Accounts Special Account within the meaning of the Small Superannuation Accounts Act 1995 (Cwlth), and a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997 (Cwlth);
- involving the crediting of an account of an employee, or any other allocation to the benefit of an employee (other than the actual payment of a contribution), or the crediting or the debiting of any other account, or any other allocation or deduction, so as to increase the entitlement or contingent entitlement of the employee under any form of superannuation, provident or retirement fund or scheme; or
- in respect of an employee who is a member of the old or new scheme of superannuation under the Superannuation Act 1988 or of any other unfunded or partly funded scheme of superannuation. The Treasurer may estimate the contingent liability of an employer for contributions that will be payable and that estimate may be treated as a contribution paid or payable by an employer in respect of an employee for the purposes of the definition of a superannuation contribution.
Please note that taxable superannuation contributions include:
- superannuation contributions paid or payable in respect of a company director (including a non-employee director), or in respect of a person taken to be an employee under the contractor provisions in Division 7;
- non-monetary contributions to a superannuation fund on behalf of an employee, a contractor deemed to be an employee or a director. The value of these contributions is to be worked out in accordance with Section 43.
In respect of contribution holidays, where it is determined that an employer is on a contribution holiday, as a result of a superannuation fund being in surplus, and the trustee(s) during that period nonetheless credit amounts to accounts of individual members of the fund, such crediting will be considered a superannuation benefit, and therefore will constitute wages liable to payroll tax.
Salary sacrifice arrangements
Employers who make payments to a superannuation fund(s) of its employee’s or director’s choice as part of a salary packaging arrangement (salary sacrifice arrangements) are subject to payroll tax.
A salary sacrifice arrangement refers to an arrangement between an employer and the employee whereby the employee agrees to forego part of their future salary or wage in return for some other form of non-cash benefits of equivalent cost to the employer.
The non-cash benefits provided may include pre-tax superannuation contributions, the provision of a motor vehicle, a laptop computer or similar portable computer, car parking fees, payment of school fees or the payment of membership fees and subscriptions.
The Australian Taxation Office treats ‘effective salary sacrificing arrangements’ and ‘ineffective salary sacrificing arrangements’ differently.
Please contact the Australian Taxation Office for further information about the income tax treatment of ‘effective’ and ‘ineffective’ salary sacrifice arrangements
Under an effective salary sacrifice arrangement:
- the employee pays income tax on the reduced salary or wage;
- salary sacrificed (pre-tax) superannuation contributions are classified as employer contributions (not employee contributions); and
- the employer may be liable to pay fringe benefit tax on the fringe benefits provided.
- The payroll tax treatment under an effective salary sacrifice arrangement is as follows:
- the reduced salary or wage on which the employee pays income tax is treated as taxable wages;
- the pre-tax superannuation contribution classified as the employer contribution is taxable; and
- the taxable value of the benefit under the Fringe Benefits Taxation Assessment Act 1986 (Cwlth), grossed-up by the Type 2 factor as shown on the Fringe Benefit Tax Return is taxable.
If the benefit provided to the employee is exempt from fringe benefit tax (for example, laptop computer) no payroll tax is payable in respect of the amount sacrificed for that benefit. Payroll tax is payable only on the reduced salary on which the employee pays income tax.
Some employees agree to make regular donations to charitable organisations of their choice under a ‘Workplace Giving’ program. This arrangement is not a salary sacrifice arrangement because the Australian Taxation Office requires that the normal gross salary must be stated on the employee’s payment summary. Payroll tax is payable on the normal gross salary.
The following examples outline the payroll tax treatment of various salary sacrifice arrangements.
An employee has a current salary of $70,000 per annum. The employee negotiates with the employer for the provision of a car under a salary sacrifice arrangement.
The new salary will be reduced to $58,000 per annum. The taxable value grossed-up by the Type 2 factor of the motor car for fringe benefit tax purposes is $6,350. Payroll tax will be payable on the $58,000 salary and the fringe benefit tax taxable value grossed-up by the Type 2 factor of $6,350.
An employee’s current salary is $65,000 per annum. The employee negotiates with the employer for the purchase of a laptop computer (cost of $3,000) under a salary sacrifice arrangement.
The new salary will be reduced to $62,000 per annum. The laptop is exempt from fringe benefit tax. Therefore, payroll tax is payable on the $62,000 salary.
An employee’s current annual salary is $60,000. The employee also makes after-tax (personal) superannuation contributions of $5,400 per annum. The employee negotiates with the employer to replace the after-tax superannuation contributions with salary sacrifice (pre-tax) contributions.
Therefore, the salary for the next financial year will be reduced to $54,600 and the employer will make a pre-tax superannuation contribution of $5,400. Payroll tax is payable on the $54,600 salary and the employer pre-tax superannuation contribution of $5,400.
Remuneration to directors or members of the governing body
Remuneration to directors or members of the governing body, such as director fees, superannuation, allowances, fringe benefits and shares and options, are subject to payroll tax. This applies to both directors or members of the government body whether working or non-working.
Under certain circumstances, payments to contractors are taxable. Generally, those circumstances are where the contractor:
- provides essentially labour services; and
- works exclusively or primarily for one principal.
The provisions relating to contractors deem such contractors to be ‘employees’ and the payments made to them, excluding GST, are deemed to be wages.
The term ‘contractors’ is a generic one, which includes sub-contractors, consultants and outworkers. The provisions apply regardless of whether the contractor provides services via a company, trust, partnership or as a sole trader.
In practical terms, the contractor provisions initially capture all contracts for the performance of work. However, the provisions contain several exemptions and if any one exemption applies to a particular contract, the payments under that contract are not taxable.
These provisions also allow the Commissioner to disregard, and treat as taxable, an arrangement that exists only to reduce or avoid payroll tax.
For certain types of contractors where the contractor provides equipment and/or materials, the Commissioner allows a percentage deduction from gross payments for non-labour components.
See Revenue Ruling PTA018: Contractor Deductions for further information on the types of contractors and their deduction percentages.
Two contractor decision tools are available to assist you in determining whether any payments made to contractors are liable for payroll tax.
Employment agency contracts
The employment agency provisions in Division 8, Part 3 apply to a labour hire arrangement where a person (the employment agent) contracts with another (the client) for the provision of labour where there is no agreement between the service provider (i.e. contract worker) and the client. Employment agencies who engage persons to provide services to their clients under an employment agency contract are liable to payroll tax. Payroll tax is calculated on any amount paid to the contract worker from any source in relation to that contract and the value of any fringe benefits and superannuation contributions provided for the contract worker.
Section 38 deems an employment agent under an employment agency contract to be the employer, and the contract worker under an employment agency contract to be an employee of the employment agent.
Any payments made by the employment agent to or on behalf of the contract worker, including fringe benefits and superannuation, are deemed to be wages for payroll tax purposes and are subject to payroll tax.
Care should be taken in determining if the employment agency provisions contained in Section 37 apply to your organisation.
These provisions apply regardless of whether the relationship between the contract worker and the employment agency is one of principal/contractor or employer/employee.
Where the Employment Agency provisions DO apply the following amounts will not be taxable:
- any amount paid in respect of the employment agent’s fee(s);
- any amount paid in respect of services provided to a client that was an exempt employer under the provisions of Part 4 except for Division 4 or 5 of that Part, Section 50 or under Part 3 of Schedule 2 (other than clause 17). In these situations, the exempt employer is to provide the employment agent with a statement stating that they are exempt from payroll tax.
Please note that the relevant contractor provisions are not applicable where a contract worker is provided under an employment agency contract.
See Information Circular No 28: Employment Agency and Revenue Ruling PTA026: Employment Agency Contracts Declarations by Exempt Employees for further information.