Employee wages and payroll tax in Victoria
Services provided wholly in Victoria
When an employee provides services wholly in Victoria, payroll tax is paid in Victoria on the wages of that employee.
Services provided in more than one jurisdiction
A four-tiered test (the nexus provisions) is used to determine a payroll tax liability when the employee provides services:
- In more than one Australian jurisdiction in a calendar month, or
- In one or more Australian jurisdiction and partly overseas in a calendar month
This test uses the location of the employee’s principal place of residence (PPR) as a starting point and can take into account other factors related to the employer’s business as follows:
- Payroll tax is payable in the jurisdiction where the employee is based. This is where their PPR is located.
- If an employee is not based in any Australian jurisdiction during the relevant month, payroll tax is payable in the jurisdiction where the employer is based. This is where they have their Australian Business Number (ABN) address. If the employer does not have a registered ABN address, or has two or more ABN addresses in different jurisdictions, payroll tax is payable in the jurisdiction where the employer has their principal place of business (PPB).
- If the employee in not based in any Australian jurisdiction and the employer does not have an ABN address or PPB 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 or payable in a number of jurisdictions, payroll tax is paid in the jurisdiction where the largest proportion of wages is paid. 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 his or her bank account.
- 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 Victoria if the services are mainly performed in Victoria in that calendar month (that is, the work performed in Victoria during that month is greater than 50 per cent).
If, after applying the nexus provisions, you are still unsure as to whether you should be paying payroll tax in Victoria, contact us on 13 21 61.