When and where are wages taxable?
All of the wages paid to an employee for a month’s service are taxable in one jurisdiction. The nexus provisions determine in which jurisdiction a wage is taxable.
Where services are performed wholly in one jurisdiction
If a worker performs services wholly in one jurisdiction in a calendar month, payroll tax is payable in that jurisdiction.
Where services are not performed wholly in one jurisdiction
If a worker performs services in one month in more than one jurisdiction, a tiered test is used to determine where the wages for that month are taxable.
The following questions will help you to establish where wages paid are taxable.
Definitions
ABN address: this is the address for service of notices under the A New Tax System (Australian Business Number) Act 1999, shown in the Australian Business Register kept under that Act.
Australian jurisdiction: a State or Territory of Australia (the boundaries of each State or Territory include coastal waters as defined in the Interpretations Act 1987).
Employee: includes other persons to whom taxable wages are paid such as directors and contractors who are deemed employees.
Month: a calendar month such as January, February etc.
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