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Overview
There are a number of different types of payments to employees which are exempt from payroll tax. These include:
Adoption and maternity leave
An exemption applies to maternity or adoption leave paid in addition to an employee's normal leave entitlements. Annual, sick, recreation, long service or any similar leave taken while the employee is absent due to pregnancy is not exempt.
Paid parental leave
An exemption applies to payments made under the Commonwealth Government's Paid Parental Leave scheme.
Contributions to redundancy benefit schemes/portable long service leave funds
An exemption applies to contributions made by employers to a portable long service leave scheme as long as they are not taxable for fringe benefit tax (FBT) purposes. The same exemption applies to contributions made by an employer to a redundancy or severance scheme (retrospective to 1 July 2006).
Defence force personnel
Wages paid to a person whilst on military leave as a member of the Defence Forces of the Commonwealth or the armed forces of any part of the Commonwealth of Nations are not liable for payroll tax.
Volunteers - firefighters, other emergencies
An exemption applies from 1 November 2006 for wages paid or payable to employees who are absent from work to volunteer as firefighters or respond to other emergencies.
The payroll tax exemption applies to employers who provide emergency workers volunteering for organisations such as the Country Fire Authority, the State Emergency Service, St Johns Ambulance, Red Cross, Volunteer Coast Guards and Life Saving Victoria.
The exemption will not apply if those employees are away on official leave (e.g. recreation, annual, long service or sick leave).
Bona fide redundancy or early retirement payment
The income tax free portion of bona fide redundancy or early retirement payment is exempt from payroll tax.
Workers compensation
Payments made by an insurer and compulsory payments required under the Workers Compensation Act 1958 are not liable for payroll tax. 'Make up pay', being additional wages paid by an employer representing the difference between the employees regular pay and the compensation payments, is liable for payroll tax.
Allowances
Although allowances are generally taxable, motor vehicle, accommodation and living away from home allowances may be fully or partially exempt in some circumstances. The exempt rates for motor vehicle allowances (per kilometre) and accommodation allowances (per night) are:
| Period | Motor Vehicles | Accommodation |
|---|---|---|
| 2011 / 2012 | 75 cents | $238.10 |
| 2010 / 2011 | 75 cents | $227.35 |
| 2009 / 2010 | 75 cents | $223.80 |
| 2008 / 2009 | 70 cents | $218.30 |
| 2007 / 2008 | 70 cents | $201.25 |
A living away from home (LAFH) allowance is a fringe benefit. Therefore the value of a LAFH allowance for payroll tax purposes is the value determined in accordance with the Fringe Benefits Tax Assessment Act 1986 (Cth). If the allowance does not qualify as a LAFH benefit under the FBT legislation, for payroll tax purposes it must be treated in the same manner as an accommodation allowance.
For more information for the period from 1 July 2007, please refer to Revenue Ruling PTA 005v2.
For more information for the period before 1 July 2007, please refer to Revenue Ruling PT-089
Checklist of payroll tax treatment of certain items.