Amendments to the Pay-roll Tax Act 2005
Amendments to the Pay-roll Tax Act 1971 No. 22
The commencement date for the following pay-roll tax amendments is 1 July 2005 except where otherwise specified.
Share benefits
The amendments confirm the administrative arrangement outlined in revenue ruling PT063.
The amendments allow for liability for pay-roll tax to arise at the time rights and shares are granted to, or vest in a director or employee. Alternatively, an employer may elect to pay tax at the time options are exercised or when the shares vest in the director or employee. Where such an election is made the value of the rights or shares are to be determined as at the time of exercise or vesting. The valuation rules applying under Commonwealth capital gains tax legislation will apply.
Financial planner exemption
The amendments implement revenue ruling PT064. They provide for an exemption for remuneration paid to financial planners, provided they are not common law employees.
The legislation applies the exemption retrospectively from 1 July 2003 to financial planners who satisfy the requirements for an exemption from the Commonwealth's Alienation of Personal Services Income tests applying to agents under the Commonwealth Income Tax Assessment Act 1997.
Termination payments to deemed employees
Pay-roll tax applies to eligible termination payments as defined in Section 27A of the Income Tax Assessment Act 1936 where the payment is subject to income tax. The Act extend pay-roll tax to the income taxable component of any termination payments paid to contractors who are deemed employees under a relevant contract.
Indirect payments to directors and other non-employees
The amendments extend the provisions under Section 3(4) of the Pay-roll Tax Act 1971 No. 22 in order to close loopholes which result in avoidance of pay-roll tax on certain categories of indirect remuneration or benefits provided to directors and beneficiaries of trusts.
Motor vehicle and overnight accommodation allowances
The amendments transfer the regulations allowing for an exemption for work-related use of a worker's own motor vehicle, and overnight accommodation allowances into the Pay-roll Tax Act 1971. The rates have been increased to 63 cents per kilometre for motor vehicle allowances and $191.55 per night for accommodation allowances.
Trust distributions to beneficiaries
The amendments transfer the Pay-roll Tax Regulation 1998, Part 3A into the Pay-roll Tax Act 1971 No. 22 to improve transparency and increase employers' awareness of their potential liability.
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