New South Wales: Payroll Tax Act 2007 (NSW)

Payroll Tax Act 2007 No 21 An Act to provide for a tax on employers in respect of certain wages, to harmonise payroll tax law with Victoria, to repeal the Pay-roll Tax Act 1971; and for other purposes. Part 1 Preliminary 1 Name of Act This Act is the Payroll Tax Act 2007. 2 Commencement This Act commences or is taken to have commenced on 1 July 2007. 3 Definitions (1) In this Act— ABN means the ABN (Australian Business Number) for an entity within the meaning of the A New Tax System (Australian Business Number) Act 1999 of the Commonwealth. agent includes— (a) a person who, in this jurisdiction, for or on behalf of another person outside this jurisdiction, holds or has the management or control of the business of that other person, and (b) a person who, by an order of the Chief Commissioner, is declared to be an agent or the sole agent for any other person for the purposes of this Act and on whom notice of that order has been served. Australia means the States of the Commonwealth and the Territories. Australian jurisdiction means a State or a Territory. coastal waters of the State has the same meaning as in Part 10 of the Interpretation Act 1987. company includes all bodies and associations (corporate and unincorporate) and partnerships. corporation has the same meaning as in section 9 of the Corporations Act 2001 of the Commonwealth. corresponding law means a law in force in another State or a Territory relating to the imposition upon employers of a tax on wages paid or payable by them and the assessment and collection of that tax. designated group employer means a member designated for a group in accordance with section 80. director of a company includes a member of the governing body of the company. employer means a person who pays or is liable to pay wages and includes— (a) the Crown in any of its capacities, and (b) a person taken to be an employer by or under this Act, and (c) a public, local or municipal body or authority constituted under the law of the Commonwealth or of a State or Territory unless, being an authority constituted under the law of the Commonwealth, it is immune from the operation of this Act. employment agency contract has the meaning given in section 37. employment agent has the meaning given in section 37. exempt wages mean wages that are declared by or under this Act to be exempt wages. exercise a function includes perform a duty. FBTA Act means the Fringe Benefits Tax Assessment Act 1986 of the Commonwealth. financial year means each year commencing on 1 July. fringe benefit has the same meaning as in the FBTA Act but does not include— (a) a tax-exempt body entertainment fringe benefit within the meaning of that Act, or (b) anything that is prescribed by the regulations under this Act not to be a fringe benefit for the purposes of this definition. function includes a power, authority or duty. group has the meaning given in section 67. GST has the same meaning as it has in the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth except that it includes notional GST of the kind for which payments may be made under section 5 of the Intergovernmental Agreement Implementation (GST) Act 2000 by a person that is a State entity within the meaning of that Act. instrument includes a cheque, bill of exchange, promissory note, money order or a postal order issued by a post office. interstate wages means wages that are taxable wages within the meaning of a corresponding law. ITAA means the Income Tax Assessment Act 1997 of the Commonwealth. liquidator means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a company. month means the month of January, February, March, April, May, June, July, August, September, October, November and December. option means an option or right, whether actual, prospective or contingent, of a person to acquire a share or to have a share transferred or allotted to the person. paid, in relation to wages, includes provided, conferred and assigned and pay and payable have corresponding meanings. payroll tax means tax imposed by section 6. perform, in relation to services, includes render. registered business address means an address for service of notices under the A New Tax System (Australian Business Number) Act 1999 of the Commonwealth on an entity that has an ABN, as shown in the Australian Business Register kept under that Act. return period, in relation to an employer, means a period relating to which that employer is required to lodge a return under this Act. service provider, in relation to an employment agency contract—see section 37. share means a share in a company and includes a stapled security. superannuation contribution has the meaning given in section 17 (2). taxable wages has the meaning given in section 10. termination payment has the meaning given in section 27. Territories means the Australian Capital Territory (including the Jervis Bay Territory) and the Northern Territory. this jurisdiction means New South Wales and the coastal waters of the State. voting share has the same meaning as in section 9 of the Corporations Act 2001 of the Commonwealth. wages has the meaning given in Part 3. Note. The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act. (2) Notes included in this Act do not form part of this Act. 4 Taxation Administration Act 1996 This Act is to be read together with the Taxation Administration Act 1996 which provides for the administration and enforcement of this Act and other taxation laws. 5 Act binds the Crown (1) This Act binds the Crown in right of this jurisdiction and, so far as the legislative power of the Parliament permits, the Crown in all its other capacities. (2) Nothing in this Act makes the Crown in any of its capacities liable to be prosecuted for an offence. Part 2 Imposition of payroll tax Division 1 Imposition of tax 6 Imposition of payroll tax Payroll tax is imposed on all taxable wages. 7 Who is liable for payroll tax The employer by whom taxable wages are paid or payable is liable to pay payroll tax on the wages. 8 Amount of payroll tax The amount of payroll tax payable by an employer is to be ascertained in accordance with Schedules 1 and 2. 9 When must payroll tax be paid (1) A person who is liable to pay payroll tax on taxable wages must pay the tax— (a) within 7 days after the end of the month in which those wages were paid or payable, other than the month of June, and (b) within 28 days after the end of the month of June in relation to taxable wages paid or payable in the month of June. (2) However, if the Chief Commissioner has reason to believe that a person may leave Australia before any payroll tax becomes payable by the person, the tax is payable on the day fixed by the Chief Commissioner by notice served on the person. Division 2 Taxable wages 10 What are taxable wages (1) For the purposes of this Act, taxable wages are wages that are taxable in this jurisdiction. (2) However, exempt wages are not taxable wages. 11 Wages that are taxable in this jurisdiction (1) For the purposes of this Act, wages are taxable in this jurisdiction if— (a) the wages are paid or payable by an employer for or in relation to services performed by an employee wholly in this jurisdiction, or (b) the wages are paid or payable by an employer for or in relation to services performed by an employee in 2 or more Australian jurisdictions, or partly in one or more Australian jurisdictions and partly outside all Australian jurisdictions, and— (i) the employee is based in this jurisdiction, or (ii) the employer is based in this jurisdiction (in a case where the employee is not based in an Australian jurisdiction), or (iii) the wages are paid or payable in this jurisdiction (in a case where both the employee and the employer are not based in an Australian jurisdiction), or (iv) the wages are paid or payable for services performed mainly in this jurisdiction (in a case where both the employee and the employer are not based in an Australian jurisdiction and the wages are not paid or payable in an Australian jurisdiction), or (c) the wages are paid or payable by an employer for or in relation to services performed by an employee wholly outside all Australian jurisdictions and are paid or payable in this jurisdiction. Note. Section 66A provides an exemption for wages paid or payable for services performed wholly in one or more other countries for a continuous period of more than 6 months. (2) The question of whether wages are taxable in this jurisdiction is to be determined by reference only to the services performed by the employee in respect of the employer during the month in which the wages are paid or payable, subject to this section. (3) Any wages paid or payable by an employer in respect of an employee in a particular month are taken to be paid or payable for or in relation to the services performed by the employee in respect of the employer during that month. Note. For example, if wages paid in a month are paid to an employee for services performed over several months, the question of whether the wages are taxable in this jurisdiction is to be determined by reference only to services performed by the employee in the month in which the wages are paid. The services performed in previous months are disregarded. (The services performed in previous months will be relevant to the question of whether wages paid in those previous months are taxable in this jurisdiction.) (4) If no services are performed by an employee in respect of an employer during the month in which wages are paid or payable to or in relation to the employee— (a) the question of whether the wages are taxable in this jurisdiction is to be determined by reference only to the services performed by the employee in respect of the employer during the most recent prior month in which the employee performed services in respect of the employer, and (b) the wages are taken to be paid or payable for or in relation to the services performed by the employee in respect of the employer during that most recent prior month. (5) If no services were performed by an employee in respect of an employer during the month in which wages are paid or payable to or in relation to the employee or in any prior month— (a) the wages are taken to be paid or payable for or in relation to services performed by the employee in the month in which the wages are paid or payable, and (b) the services are taken to have been performed at a place or places where it may be reasonably expected that the services of the employee in respect of the employer will be performed. (6) All amounts of wages paid or payable in the same month by the same employer in respect of the same employee are to be aggregated for the purposes of determining whether they are taxable in this jurisdiction (as if they were paid or payable for all services performed by the employee in the month in which the wages are paid or payable, or the most recent prior month, as the case requires). Note. For example, if one amount of wages is paid by an employer in a particular month for services performed in this jurisdiction, and another amount of wages is paid by the same employer in the same month for services performed by the same employee in another Australian jurisdiction, the wages paid are to be aggregated (as if they were paid for all services performed by the employee in that month). Accordingly, subsection (1) (b) would be applied for the purpose of determining whether the wages are taxable in this jurisdiction. (7) If wages are paid in a different month from the month in which they are payable, the question of whether the wages are taxable in this jurisdiction is to be determined by reference to the earlier of the relevant months. 11A Jurisdiction in which employee is based (1) For the purposes of this Act, the jurisdiction in which an employee is based is the jurisdiction in which the employee's principal place of residence is located. (2) The jurisdiction in which an employee is based is to be determined by reference to the state of affairs existing during the month in which the relevant wages are paid or payable. (3) If more than one jurisdiction would qualify as the jurisdiction in which an employee is based during a month, the jurisdiction in which the employee is based is to be determined by reference to the state of affairs existing on the last day of that month. (4) An employee who does not have a principal place of residence is taken, for the purposes of this Act, to be an employee who is not based in an Australian jurisdiction. (5) In the case of wages paid or payable to a corporate employee, the jurisdiction in which the employee is based is to be determined in accordance with section 11B instead of this section (as if a reference in section 11B to an employer were a reference to an employee). (6) In this section, a corporate employee is a company that is taken to be an employee under section 34 or 39 or a company to whom a payment is made that is taken to be wages payable to an employee under section 42 or 47. 11B Jurisdiction in which employer is based (1) For the purposes of this Act, the jurisdiction in which an employer is based is— (a) the jurisdiction in which the employer's registered business address is located (if the employer has an ABN), or (b) the jurisdiction in which the employer's principal place of business is located (in any other case). (2) If wages are paid or payable in connection with a business carried on by an employer under a trust, the employer's registered business address is the registered business address of the trust or, if the trust does not have an ABN, the registered business address of the trustee of the trust. (3) If an employer has registered business addresses located in different jurisdictions at the same point in time, the jurisdiction in which the employer is based at that point in time is the jurisdiction in which the employer's principal place of business is located. (4) The jurisdiction in which an employer is based is to be determined by reference to the state of affairs existing during the month in which the relevant wages are paid or payable. (5) If more than one jurisdiction would qualify as the jurisdiction in which an employer is based during a month, the jurisdiction in which the employer is based is to be determined by reference to the state of affairs existing on the last day of that month. (6) An employer who has neither a registered business address nor a principal place of business is taken, for the purposes of this Act, to be an employer who is not based in an Australian jurisdiction. 11C Place and date of payment of wages (1) For the purposes of this Act, wages are taken to have been paid at a place if, for the purpose of the payment of those wages— (a) an instrument is sent or given or an amount is transferred by an employer to a person or a person's agent at that place, or (b) an instruction is given by an employer for the crediting of an amount to the account of a person or a person's agent at that place. (2) The wages are taken to have been paid on the date that the instrument was sent or given, the amount was transferred or the account credited in accordance with the instruction (as the case requires). (3) Wages are taken to be payable at the place at which they are paid, subject to this section. (4) Wages that are not paid by the end of the month in which they are payable are taken to be payable at— (a) the place where wages were last paid by the employer to the employee, or (b) if wages have not previously been paid by the employer to the employee—the place where the employee last performed services in respect of the employer before the wages became payable. (5) If wages paid or payable in the same month by the same employer in respect of the same employee are paid or payable in more than one Australian jurisdiction, the wages paid or payable in that month are taken to be paid or payable in the Australian jurisdiction in which the highest proportion of the wages are paid or payable. Note. Section 11 requires all wages paid or payable in the same month by the same employer in respect of the same employee to be aggregated for the purpose of determining whether the wages are taxable in this jurisdiction. The above provision ensures only one Australian jurisdiction can be considered to be the jurisdiction in which the wages are paid or payable. Division 3 Other 12 Payroll tax paid under corresponding applied law (1) For the purposes of ascertaining the payroll tax payable under this Act by an employer who during a return period pays taxable wages and Commonwealth place wages, there is to be deducted from the amount of payroll tax payable by the employer under this Act the amount of payroll tax payable by the employer under the corresponding applied law. (2) In this section— Commonwealth Act means the Commonwealth Places (Mirror Taxes) Act 1998 of the Commonwealth. Commonwealth place wages means wages that would be taxable wages within the meaning of the corresponding applied law if the corresponding applied law applied in relation to each place in this jurisdiction that is a Commonwealth place. corresponding applied law means the provisions of the Payroll Tax Act 2007 that would apply in relation to each place in this jurisdiction that is a Commonwealth place, pursuant to section 6 (2) of the Commonwealth Act, if those provisions were excluded provisions within the meaning of section 6 (1) of the Commonwealth Act. Part 3 Wages Division 1 General concept of wages 13 What are wages? (1) For the purposes of this Act, wages mean wages, remuneration, salary, commission, bonuses or allowances paid or payable to an employee, including— (a) an amount paid or payable by way of remuneration to a person holding an office under the Crown or in the service of the Crown, and (b) an amount paid or payable under any prescribed classes of contracts to the extent to which that payment is attributable to labour, and (c) an amount paid or payable by a company by way of remuneration to or in relation to a director of that company, and (d) an amount paid or payable by way of commission to an insurance or time-payment canvasser or collector, and (e) an amount that is included as or taken to be wages by any other provision of this Act. (2) For the purposes of this Act, wages, remuneration, salary, commission, bonuses or allowances are wages— (a) whether paid or payable at piece work rates or otherwise, and (b) whether paid or payable in cash or in kind. (3) This Act applies in respect of wages referred to in subsection (1) (a)–(e) that are paid or payable to or in relation to a person who is not an employee in the same way as it applies to wages paid or payable to an employee (as if a reference in this Act to an employee included a reference to any such person). Division 2 Fringe benefits 14 Wages include fringe benefits (1) For the purposes of this Act, wages include a fringe benefit. (2) Subsection (1) does not apply to benefits that are exempt benefits for the purposes of the FBTA Act (other than deposits to the Superannuation Holding Accounts Special Account within the meaning of the Small Superannuation Accounts Act 1995 of the Commonwealth). 15 Value of wages comprising fringe benefits (1) For the purposes of this Act, the value of wages comprising a fringe benefit is to be determined in accordance with the formula— where— TV is the value that would be the taxable value of the benefit as a fringe benefit for the purposes of the FBTA Act. FBT rate is the rate of fringe benefits tax imposed by the FBTA Act that applies when the liability to payroll tax under this Act arises. (2) In this Act, a reference to taxable wages that were paid or payable by an employer during a month is, in relation to taxable wages comprising fringe benefits— (a) a reference to the value of the fringe benefits paid or payable by the employer during the month, or (b) if an election by the employer is in force under section 16, a reference to an amount calculated in accordance with that section. (3) In this Act, a reference to taxable wages that were paid or payable by an employer during a year is, in relation to taxable wages comprising fringe benefits, a reference to an amount calculated by adding together the amounts under subsection (2) (a) or (b) (or subsection (2) (a) and (b)) as the case requires, for the months of that year. 16 Employer election regarding taxable value of fringe benefits (1) An employer who has paid or is liable to pay fringe benefits tax imposed by the FBTA Act in respect of a period of not less than 15 months before 30 June in any year may elect to include as the value of the fringe benefits paid or payable by the employer during the month concerned— (a) in a return lodged in relation to each of the first 11 months occurring after 30 June in that year—1/12 of the amount determined in accordance with subsection (2) or that part of that amount as, in accordance with section 10, comprises taxable wages for the year of tax (within the meaning of the FBTA Act) ending on 31 March preceding the commencement of the current financial year, and (b) in the return lodged in relation to the 12th month—the amount determined in accordance with subsection (2) or that part of that amount as, in accordance with section 10, comprises taxable wages for the year of tax (within the meaning of the FBTA Act) ending on 31 March preceding that month, less the total of the amounts of fringe benefits included in the returns for each of the preceding 11 months. (2) The amount determined in accordance with this subsection is to be determined in accordance with the formula— where— AFBA is the aggregate fringe benefits amount within the meaning of section 136 of the FBTA Act. FBT rate is the rate of fringe benefits tax imposed by the FBTA Act that applies when the liability to payroll tax under this Act arises. (3) An election under subsection (1) takes effect when it is notified to the Chief Commissioner in the form approved by the Chief Commissioner. (4) After an employer has made an election under subsection (1), the employer must lodge returns containing amounts calculated in accordance with the election unless the Chief Commissioner approves, by notice in writing given to the employer, the termination of the election and allows the employer to include the value referred to in section 15 (2) (a). (5) If an employer ceases to be liable to pay payroll tax, the value of taxable wages comprising fringe benefits to be included in the employer's final return is (irrespective of whether or not the employer has made an election under subsection (1)) the value of the fringe benefits paid or payable by the employer for the period commencing on and including the preceding 1 July until the date on which the employer ceases to be liable to payroll tax, less the value of the fringe benefits paid or payable by the employer during that period on which payroll tax has been paid. Division 3 Superannuation contributions 17 Wages include superannuation contributions (1) For the purposes of this Act, wages include a superannuation contribution. (2) A superannuation contribution is a contribution paid or payable by an employer in respect of an employee— (a) to or as a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 of the Commonwealth, or (b) as a superannuation guarantee charge within the meaning of the Superannuation Guarantee (Administration) Act 1992 of the Commonwealth, or (c) to or as any other form of superannuation, provident or retirement fund or scheme including— (i) the Superannuation Holding Accounts Special Account within the meaning of the Small Superannuation Accounts Act 1995 of the Commonwealth, and (ii) a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997 of the Commonwealth, and (iii) a wholly or partly unfunded fund or scheme. (3) Setting aside any money or anything that is worth money as, or as part of, a superannuation fund, superannuation guarantee charge or any other form of superannuation, provident or retirement fund or scheme is taken to be paying a superannuation contribution. (4) Making a superannuation contribution of anything that is worth money is taken to be paying a superannuation contribution of the amount equal to its value, and its value is to be worked out in accordance with section 43 as if that section referred to the contribution instead of to wages. (5) A superannuation, provident or retirement fund or scheme is unfunded to the extent that money paid or payable by an employer in respect of an employee covered by the fund or scheme is not paid or payable during the employee's period of service with the employer. (6) In this section— employee includes any person to whom, by virtue of a paragraph of the definition of wages in section 13 (1), an amount paid or payable in the circumstances referred to in that paragraph constitutes wages. Division 4 Shares and options 18 Inclusion of grant of shares and options as wages (1) For the purposes of this Act, wages include the grant of a share or an option to an employee by an employer in respect of services performed by the employee if the share or option is an ESS interest (within the meaning of section 83A–10 of the Income Tax Assessment Act 1997 of the Commonwealth) and is granted to the employee under an employee share scheme (within the meaning of that section). Note. A grant of a share or an option to an employee by an employer that is not an ESS interest will be taxable as a fringe benefit under Division 2 of this Part. (2) Any such wages are taken, for the purpose of the imposition of payroll tax, to be paid or payable on the relevant day. (3) For the purposes of this Division, the relevant day is the day that the employer elects in accordance with this Division to treat as the day on which the wages are paid or payable. (4) To avoid doubt, the grant of a share or option is valuable consideration for the purposes of section 46. 19 Choice of relevant day (1) The employer can elect to treat as the relevant day either the date on which the share or option is granted to the employee or the vesting date. (2) A share or option is granted to a person if— (a) another person transfers the share or option to that person (other than, in the case of a share, by issuing the share to that person), or (b) in the case of a share—another person allots the share to that person, or (c) in the case of an option—another person confers the option on, or otherwise creates the option in, that person, or (d) the person otherwise acquires a legal interest in the share or option from another person, or (e) the person acquires a beneficial interest in the share or option from another person. (2A) To avoid doubt, if an employee acquires a right to be granted a share or an option, or some other material benefit, at the election of the employer, the share or option is not granted until the employer elects to grant the share or option. (3) The vesting date in respect of a share is one of the following dates (whichever happens first)— (a) the date on which the share vests in the employee (that is, 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), (b) the date at the end of the period of 7 years from the date on which the share is granted to the employee. (4) The vesting date in respect of an option is one of the following dates (whichever happens first)— (a) the date on which the share to which the option relates is granted to the employee, (b) the date on which the employee exercises a right under the option to have the share the subject of the option transferred to, allotted to or vested in him or her, (c) the date at the end of the period of 7 years from the date on which the option is granted to the employee. 20 Deemed choice of relevant day in special cases (1) If an employer grants a share or an option to an employee and the value of the grant of the share or option is not included in the taxable wages of the employer for the financial year in which the share or option was granted, the employer is taken to have elected to treat the wages constituted by the grant of that share or option as being paid or payable on the vesting date. (2) If an employer grants a share or an option to an employee and the value of the grant of the share or option is nil or, if the employer were to elect to treat the date of grant as the relevant day, the wages constituted by the grant would not be liable to payroll tax, the employer is taken to have elected to treat the wages constituted by the grant of that share or option as being paid or payable on the date on which the share or option was granted. 21 Effect of rescission, cancellation of share or option (1) If the grant of a share or option is withdrawn, cancelled or exchanged before the vesting date for any valuable consideration (other than the grant of other shares or options), the following provisions apply— (a) the date of withdrawal, cancellation or exchange is taken to be the vesting date of the share or option, (b) the market value of the share or option, on the vesting date, is taken to be the amount of the valuable consideration (and, accordingly, that amount is the amount paid or payable as wages on that date). (2) If an employer includes the value of a grant of a share or option in the taxable wages of the employer for a financial year and the grant is rescinded because the conditions attaching to the grant were not met, the taxable wages of the employer, in the financial year in which the grant is rescinded, are to be reduced by the value of the grant as previously included in the taxable wages of the employer. (3) Subsection (2) does not apply just because an employee fails to exercise an option or to otherwise exercise his or her rights in respect of a share or option. 22 Grant of share pursuant to exercise of option The grant of the share by an employer does not constitute wages for the purposes of this Act if the employer is required to grant the share as a consequence of the exercise of an option by a person and— (a) the grant of the option to the person constitutes wages for the purposes of this Act, or (b) the option was granted to the person before 1 July 2003. 23 Value of shares and options (1) If the grant of a share or option constitutes wages under this Division, the amount paid or payable as wages is taken, for the purposes of this Act, to be the value of the share or option (expressed in Australian currency) on the relevant day, less the consideration (if any) paid or given by the employee in respect of the share or option (other than consideration in the form of services performed). (2) The value of a share or an option is— (a) the market value, or (b) the amount determined as provided for by the Commonwealth income tax provisions. (3) The employer may elect the method by which the value of a share or an option is determined in any return lodged under this Act. (4) However, the Chief Commissioner may determine the method by which the value of a share or an option is determined if the grant of the share or option is not included as wages in a return lodged by an employer as required by this Act. (5) In determining the market value of a share or option, anything that would prevent or restrict conversion of the share or option to money is to be disregarded. (6) The Commonwealth income tax provisions apply with the following modifications, and any other necessary modifications— (a) the value of an option is to be determined as if it were a right to acquire a beneficial interest in a share, (b) a reference to the acquisition of a beneficial interest in a share or right is to be read as a reference to the grant of a share or an option. (7) In this section, Commonwealth income tax provisions means section 83A–315 of the Income Tax Assessment Act 1997 of the Commonwealth and the regulations made for the purposes of that section. Note. See Division 83A of the Income Tax Assessment (1997 Act) Regulations 2021 of the Commonwealth for the relevant regulations. 24 Inclusion of shares and options granted to directors as wages (1) For the purposes of this Act, wages include the grant of a share or an option by a company to a director of the company who is not an employee of the company by way of remuneration for the appointment or services of the director. (2) For that purpose, the other provisions of this Division apply in respect of any such grant as if a reference to the employer were a reference to the company and a reference to the employee were a reference to the director of the company. (3) In this section, a reference to a director of the company includes a reference to the following— (a) a person who, under a contract or other arrangement, is to be appointed as a director of the company, (b) a former director of the company. (4) However, if wages referred to in this section are fringe benefits, the value of the wages is to be determined in accordance with Division 2 of this Part (and not this Division). Note. Section 13 provides that a reference to an employee in this Act includes a reference to any person to whom any amount that is treated as wages under this Act is paid or payable. See also section 11, which deems the wages to be paid or payable for services performed. 25 (Repealed) 26 Place where wages are payable (1) The wages constituted by the grant of the share or option are taken to be paid or payable in this jurisdiction if the share is a share in a local company or, in the case of an option, an option to acquire shares in a local company. (2) In any other case, the wages constituted by the grant of the share or option are taken to be paid or payable outside this jurisdiction. Note. The place where wages are paid or payable is sometimes relevant to determining whether the wages are liable to payroll tax under this Act. See section 11. (3) In this section— local company means— (a) a company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth that is taken to be registered in this jurisdiction for the purposes of that Act, or (b) any other body corporate that is incorporated under an Act of this jurisdiction. Division 5 Termination payments 27 Definitions In this Division— employment termination payment means— (a) an employment termination payment within the meaning of section 82-130 of the ITAA, or (b) a payment that would be an employment termination payment within the meaning of section 82-130 of the ITAA but for the fact that it was received later than 12 months after the termination of a person's employment, or (c) a transitional termination payment within the meaning of section 82-10 of the Income Tax (Transitional Provisions) Act 1997 of the Commonwealth. termination payment means— (a) a payment made in consequence of the retirement from, or termination of, any office or employment of an employee, being— (i) an unused annual leave payment, or (ii) an unused long service leave payment, or (iii) so much of an employment termination payment paid or payable by an employer, whether or not paid to the employee or to any other person or body, that would be included in the assessable income of an employee under Part 2-40 of the ITAA if the whole of the employment termination payment had been paid to the employee, or (b) an amount paid or payable by a company as a consequence of the termination of the services or office of a director of the company, whether or not paid to the director or to any other person or body, that would be an employment termination payment if that amount had been paid or payable as a consequence of termination of employment, or (c) an amount paid or payable by a person who is an employer under a relevant contract (within the meaning of section 32) as a consequence of the termination of the supply of the services of an employee under the contract, whether or not paid to the employee or to any other person, if the amount would be an employment termination payment if that amount had been paid or payable as a consequence of termination of employment. unused annual leave payment has the same meaning as in section 83-10 of the ITAA. unused long service leave payment has the same meaning as in section 83-75 of the ITAA. 28 Termination payments For the purposes of this Act, wages include a termination payment. Division 6 Allowances 29 Motor vehicle allowances (1) For the purposes of this Act, wages, in respect of a financial year, do not include the exempt component of a motor vehicle allowance paid or payable in respect of that year. (2) Accordingly, if the total motor vehicle allowance paid or payable to an employee in respect of a financial year does not exceed the exempt component, the motor vehicle allowance is not wages for the purposes of this Act. (3) If the total motor vehicle allowance paid or payable to an employee in respect of a financial year exceeds the exempt component (if any), only that amount that exceeds the exempt component of the motor vehicle allowance is included as wages for the purposes of this Act. (4) The exempt component of a motor vehicle allowance paid or payable in respect of a financial year is calculated in accordance with the formula— where— E is the exempt component. K is the number of business kilometres travelled during the financial year. R is the exempt rate. (5) The number of business kilometres travelled during the financial year ("K") is to be determined in accordance with the continuous recording method, or the averaging method, whichever method is selected and used by the employer in accordance with Part 5 of Schedule 1. (6) The Chief Commissioner, by order in writing, may approve the use, by an employer or class of employer, of another method of determining the number of business kilometres travelled during the financial year (including the use of an estimate). If so, the number of business kilometres travelled during the financial year is to be determined in accordance with the method approved by the Chief Commissioner. (7) For the purposes of this section, the exempt rate for the financial year concerned is— (a) the rate determined by legislative instrument under section 28-25 of the ITAA for calculating a deduction for car expenses using the cents per kilometre method in the financial year immediately preceding the financial year in which the allowance is paid or payable, or (b) if there is more than one rate under the determination referred to in paragraph (a), the highest of those rates, or (c) if no rate is determined as referred to in paragraph (a), the rate prescribed by the regulations under this Act. 30 Accommodation allowances (1) For the purposes of this Act, wages do not include an accommodation allowance paid or payable to an employee in respect of a night's absence from the person's usual place of residence that does not exceed the exempt rate. (2) If the accommodation allowance paid or payable to an employee in respect of a night's absence from the person's usual place of residence exceeds the exempt rate, wages include that allowance only to the extent that it exceeds the exempt rate. (3) For the purposes of this section, the exempt rate for the financial year concerned is— (a) the total reasonable amount for daily travel allowance expenses using the lowest capital city for the lowest salary band for the financial year determined by the Commissioner of Taxation of the Commonwealth, or (b) if no determination referred to in paragraph (a) is in force, the rate prescribed by the regulations. Division 7 Contractor provisions 31 Definitions In this Division— contract includes an agreement, arrangement or undertaking, whether formal or informal and whether express or implied. relevant contract has the meaning given in section 32. re-supply of goods acquired from a person includes— (a) a supply to the person of goods in an altered form or condition, and (b) a supply to the person of goods in which the first-mentioned goods have been incorporated. services includes results (whether goods or services) of work performed. supply includes supply by way of sale, exchange, lease, hire or hire-purchase, and in relation to services includes the providing, granting or conferring of services. 32 What is a relevant contract? (1) In this Division, a relevant contract in relation to a financial year is a contract under which a person (the designated person) during that financial year, in the course of a business carried on by the designated person— (a) supplies to another person services for or in relation to the performance of work, or (b) has supplied to the designated person the services of persons for or in relation to the performance of work, or (c) gives out goods to natural persons for work to be performed by those persons in respect of those goods and for re-supply of the goods to the designated person or, where the designated person is a member of a group, to another member of that group. (2) However, a relevant contract does not include a contract of service or a contract under which a person (the designated person) during a financial year in the course of a business carried on by the designated person— (a) is supplied with services for or in relation to the performance of work that are ancillary to the supply of goods under the contract by the person by whom the services are supplied or to the use of goods which are the property of that person, or (b) is supplied with services for or in relation to the performance of work where— (i) those services are of a kind not ordinarily required by the designated person and are performed by a person who ordinarily performs services of that kind to the public generally, or (ii) those services are of a kind ordinarily required by the designated person for less than 180 days in a financial year, or (iii) those services are provided for a period that does not exceed 90 days or for periods that, in the aggregate, do not exceed 90 days in that financial year and are not services— (A) provided by a person by whom similar services are provided to the designated person, or (B) for or in relation to the performance of work where any of the persons who perform the work also perform similar work for the designated person, for periods that, in the aggregate, exceed 90 days in that financial year, or (iv) those services are supplied under a contract to which subparagraphs (i)–(iii) do not apply and the Chief Commissioner is satisfied that those services are performed by a person who ordinarily performs services of that kind to the public generally in that financial year, or (c) is supplied by a person (the contractor) with services for or in relation to the performance of work under a contract to which paragraphs (a) and (b) do not apply where the work to which the services relate is performed— (i) by two or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or (ii) where the contractor is a partnership of two or more natural persons, by one or more of the members of the partnership and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or (iii) where the contractor is a natural person, by the contractor and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or (d) is supplied with services solely for or ancillary to the conveyance of goods by means of a vehicle provided by the person conveying them. (2A) Subsection (2) does not apply if the Chief Commissioner determines that the contract or arrangement under which the services are supplied was entered into with an intention either directly or indirectly of avoiding or evading the payment of tax by any person. (2B) Subsection (2) (a), (b), (c) or (d) does not apply to a contract under which any additional services or work (of a kind not covered by the relevant paragraph) are supplied or performed under the contract. (3) For the purposes of this section, an employment agency contract under which services are supplied by an employment agent, or a service provider is procured by an employment agent, is not a relevant contract. 33 Persons taken to be employers (1) For the purposes of this Act, a person— (a) who during a financial year, under a relevant contract, supplies services to another person, or (b) to whom during a financial year, under a relevant contract, the services of persons are supplied for or in relation to the performance of work, or (c) who during a financial year, under a relevant contract, gives out goods to other persons, is taken to be an employer in respect of that financial year. (2) If a contract is a relevant contract under both section 32 (1) (a) and (b)— (a) the person to whom, under the contract, the services of persons are supplied for or in relation to the performance of work is taken to be an employer, and (b) despite subsection (1) (a), the person who under the contract supplies the services is taken not to be an employer. 34 Persons taken to be employees For the purposes of this Act, a person who during a financial year— (a) performs work for or in relation to which services are supplied to another person under a relevant contract, or (b) being a natural person, under a relevant contract, re-supplies goods to an employer, is taken to be an employee in respect of that financial year. 35 Amounts under relevant contracts taken to be wages (1) For the purposes of this Act, amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract or the re-supply of goods by an employee under a relevant contract are taken to be wages paid or payable during that financial year. (2) If an amount referred to in subsection (1) is included in a larger amount paid or payable by an employer under a relevant contract during a financial year, that part of the larger amount which is not attributable to the performance of work relating to the relevant contract or the re-supply of goods by an employee under the relevant contract is as determined by the Chief Commissioner. (3) An amount paid or payable for or in relation to the performance of work under a relevant contract is taken to include— (a) any payment made by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be a superannuation contribution if made in relation to a person in the capacity of an employee, and (b) the value of any share or option (not otherwise included as wages under this Act) provided or liable to be provided by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be included as wages under Division 4 if provided to a person in the capacity of an employee. 36 Liability provisions If, in respect of a payment for or in relation to the performance of work that is taken to be wages under this Division, payroll tax is paid by a person taken under this Division to be an employer— (a) no other person is liable to payroll tax in respect of that payment, and (b) if another person is liable to make a payment for or in relation to that work, that person is not liable to payroll tax in respect of that payment unless it or the payment by the first-mentioned person is made with an intention either directly or indirectly of avoiding or evading the payment of tax whether by the first-mentioned person or another person. Division 8 Employment agents 36A Division not applicable to wages paid to common law employees This Division does not apply in relation to wages that are exempt wages under section 66B and clause 13B of Schedule 2. 37 Definitions (1) For the purposes of this Act, an employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent. (2) However, a contract is not an employment agency contract for the purposes of this Act if it is, or results in the creation of, a contract of employment between the service provider and the client. (3) In this section— contract includes agreement, arrangement and undertaking. 38 Persons taken to be employers For the purposes of this Act, the employment agent under an employment agency contract is taken to be an employer. 39 Persons taken to be employees For the purposes of this Act, the person who performs work for or in relation to which services are supplied to the client under an employment agency contract is taken to be an employee of the employment agent. 40 Amounts taken to be wages (1) For the purposes of this Act, the following are taken to be wages paid or payable by the employment agent under an employment agency contract— (a) any amount paid or payable to or in relation to the service provider in respect of the provision of services in connection with the employment agency contract, (b) the value of any benefit provided for or in relation to the provision of services in connection with the employment agency contract that would be a fringe benefit if provided to a person in the capacity of an employee, (c) any payment made in relation to the service provider that would be a superannuation contribution if made in relation to a person in the capacity of an employee. (2) Subsection (1) does not apply to an employment agency contract to the extent that an amount, benefit or payment referred to in that subsection would be exempt from payroll tax under Part 4 (other than under section 50 or Division 4 or 5 of that Part), or Part 3 of Schedule 2 (other than clause 5 or 13A), had the service provider performed the services as an employee of the client, if the client has given a declaration to that effect, in the form approved by the Chief Commissioner, to the employment agent. 41 Liability provisions Subject to section 42, if an employment agent under an employment agency contract— (a) by arrangement procures the services of a service provider for a client of the employment agent, and (b) pays payroll tax in respect of an amount, benefit or payment that is, under section 40, taken to be wages paid or payable by the employment agent in respect of the provision of those services in connection with that contract, no other person (including any other person engaged to procure the services of the service provider for the employment agent's client as part of the arrangement) is liable to pay payroll tax in respect of wages paid or payable for the procurement or performance of those services by the service provider for the client. 42 Agreement to reduce or avoid liability to payroll tax (1) If the effect of an employment agency contract is to reduce or avoid the liability of any party to the contract to the assessment, imposition or payment of payroll tax, the Chief Commissioner may— (a) disregard the contract, and (b) determine that any party to the contract is taken to be an employer for the purposes of this Act, and (c) determine that any payment made in respect of the contract is taken to be wages for the purposes of this Act. (2) If the Chief Commissioner makes a determination under subsection (1), the Chief Commissioner must serve a notice of the determination on the person taken to be an employer for the purposes of this Act. (3) The notice must set out the facts on which the Chief Commissioner relies and the reasons for the determination. (4) This section has effect in relation to agreements, transactions and arrangements made before, on or after the commencement of this section. Division 9 Other 43 Value of wages paid in kind The value of wages (except fringe benefits and shares and options) that are paid or payable in kind is the greater of— (a) the value agreed or attributed to the wages in, or ascertainable for the wages from, arrangements between the employer and the employee, whichever is the greater, and (b) if the regulations prescribe how the value of wages of that type is to be determined—the value determined in accordance with the regulations. 44 GST excluded from wages (1) If a person is liable to pay GST on the supply to which wages paid or payable to the person relate, the amount or value of those wages on which payroll tax is payable is the amount or value of the wages paid or payable to the person minus the relevant proportion of the amount of GST payable by the person on the supply to which the wages relate. (2) Subsection (1) does not apply in respect of the value of wages comprising a fringe benefit. (3) In this section— consideration has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth. relevant proportion, in relation to GST payable on a supply to which wages relate, means the proportion that the amount or value of the wages bears to the consideration for the supply to which the wages relate. 45 Wages paid by group employers A reference in this Act to wages paid or payable by a member of a group includes wages that would be taken to be paid or payable by a member of a group if the member were the employer of the employee to whom the wages were paid. 46 Wages paid by or to third parties (1) If any of the following amounts of money or other valuable consideration would, if paid or given or to be paid or given directly by an employer to an employee, be or be included as wages paid or payable by the employer to the employee for the purposes of this Act, they are taken to be wages paid or payable by the employer to the employee— (a) any money or other valuable consideration paid or given, or to be paid or given, to an employee, for the employee's services as an employee of an employer, by a person other than the employer, (b) any money or other valuable consideration paid or given, or to be paid or given, by an employer, for an employee's services as the employee of the employer, to a person other than the employee, (c) any money or other valuable consideration paid or given, or to be paid or given, by a person other than an employer, for an employee's services as an employee of the employer, to a person other than the employee. (2) If any of the following amounts of money or other valuable consideration would, if paid or given or to be paid or given directly by a company to a director of the company, be or be included as wages paid or payable by the company to the director for the purposes of this Act, they are taken to be wages paid or payable by the company to the director— (a) any money or other valuable consideration paid or given, or to be paid or given, to a director of a company, by way of remuneration for the appointment or services of the director to the company, by a person other than the company, (b) any money or other valuable consideration paid or given, or to be paid or given, by a company, by way of remuneration for the appointment or services of the director to the company, to a person other than the director, (c) any money or other valuable consideration paid or given, or to be paid or given, by any person, by way of remuneration for the appointment or services of a director to the company, to a person other than the director. (3) In this section, director of a company includes— (a) a person who, under a contract or other arrangement, is to be appointed as a director of the company, and (b) a former director of the company. 47 Agreement etc to reduce or avoid liability to payroll tax (1) If any person enters into any agreement, transaction or arrangement, whether in writing or otherwise, under which a natural person performs, for or on behalf of another person, services in respect of which any payment is made to some other person related or connected to the natural person performing the services and the effect of the agreement, transaction or arrangement is to reduce or avoid the liability of any person to the assessment, imposition or payment of payroll tax, the Chief Commissioner may— (a) disregard the agreement, transaction or arrangement, and (b) determine that any party to the agreement, transaction or arrangement is taken to be an employer for the purposes of this Act, and (c) determine that any payment made in respect of the agreement, transaction or arrangement is taken to be wages for the purposes of this Act. (2) If the Chief Commissioner makes a determination under subsection (1), the Chief Commissioner must serve a notice to that effect on the person taken to be an employer for the purposes of this Act. (3) The notice must set out the facts on which the Chief Commissioner relies and the reasons for the determination. (4) This section has effect in relation to agreements, transactions and arrangements made before, on or after the commencement of this section. Part 4 Exemptions Division 1 Non-profit organisations 48 Non-profit organisations (1) Subject to subsection (2), wages are exempt wages if they are paid or payable by any of the following— (a) a religious institution, (b) a public benevolent institution (but not including an instrumentality of the State), (c) a non-profit organisation having as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose (but not including a school, an educational institution, an educational company or an instrumentality of the State). (2) The wages must be paid or payable— (a) for work of a kind ordinarily performed in connection with the religious, charitable, benevolent, philanthropic or patriotic purposes of the institution or body, and (b) to a person engaged exclusively in that kind of work. (3) For the purposes of subsection (1) (c), an educational company is a company— (a) in which an educational institution has a controlling interest, and (b) that provides, promotes or supports the educational services of that institution. (4) For the purposes of subsection (3), an educational institution has a controlling interest in an educational company if— (a) members of the board of management of the company who are entitled to exercise a majority in voting power at meetings of the board of management are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the educational institution, or (b) the educational institution may (whether directly or indirectly) exercise, control the exercise of, or substantially influence the exercise of, more than 50% of the voting power attached to voting shares, or any class of voting shares, issued by the company, or (c) the educational institution has power to appoint more than 50% of the members of the board of management of the company. (5) In this section— educational institution means an entity that provides education above secondary level. Division 2 Education and training 49 Schools and educational services and training Wages are exempt wages as provided for in Division 1 of Part 3 of Schedule 2. 50 Community Development Employment Project (1) Wages are exempt wages if they are paid or payable to an Aboriginal person who is employed under an employment project. (2) An employment project is an employment project under the Community Development Employment Project funded by the Department of Employment and Workplace Relations of the Commonwealth or the Torres Strait Regional Authority. Division 3 Health care service providers 51 Health care service providers (1) Subject to subsection (2), wages paid or payable by a health care service provider are exempt wages. (2) The wages must be paid or payable— (a) for work of a kind ordinarily performed in connection with the conduct of a health care service provider, and (b) to a person engaged exclusively in that kind of work. (3) For the purposes of this section, health care service provider has the meaning given in Division 2 of Part 3 of Schedule 2. 52 Division not to limit other exemptions (1) Nothing in this Division limits the application of any other Division of this Part. (2) For example, if a health care service provider is also a non-profit organisation, the exemption for non-profit organisations referred to in section 48 may still apply. Division 4 Maternity and adoption leave 53 Maternity and adoption leave (1) Wages are exempt wages if they are paid or payable to an employee in respect of— (a) maternity leave, being leave given to a female employee in connection with her pregnancy or the birth of her child (other than sick leave, recreation leave, annual leave or any similar leave), or (b) adoption leave, being leave given to an employee in connection with the adoption of a child by him or her (other than sick leave, recreation leave, annual leave or any similar leave). (2) It is immaterial whether the leave is taken durin