When are wages liable?
Overview
Liability is based primarily on where the services are performed and secondly on where the employee is based. An employee is based in NSW if his or her principal place of residence is in NSW.
Details
Wages paid for services performed wholly in NSW for a calendar month are liable in NSW.
Wages paid for services performed in 2 or more jurisdictions for a calendar month are liable in NSW if the employee is based in NSW. An employee is based in NSW if the employee’s principal place of residence is located in NSW.
If the employee is not based in an Australian jurisdiction tax is payable in NSW if the employer is based in NSW. An employer is based in NSW if the employer’s registered address (for ABN purposes) is in NSW. Where an employer has an ABN address in more than one state or territory, or has an overseas address, tax is payable in the state or territory where the employer has its principal place of business
Where an employee performs services in one or more states or territories and also in another country during a month, but neither the employer nor the employee have the relevant Australian nexus tax is payable in the state or territory where the wages are paid.
Wages paid outside Australia for services performed mainly in NSW are liable in NSW, irrespective of whether the employee and the employer are based outside of Australia. If the services are not performed mainly in any Australian state or territory, no tax is payable in any Australian state or territory.
Wages paid in NSW to a worker performing services in another country for a period of six months or less are liable in NSW. However, if the worker performs services in another country for a continuous period of more than six months from the day the wages were first paid, no part of the wages paid for those overseas services are liable. If the employee returns to work in Australia for any period, then departs again, the six months will recommence.
To determine whether wages are paid for services performed in more than one state or territory, only the services provided during the month in which the wages were paid are taken into account. If no services were performed during the month of payment, the place where services were last performed by the particular employee determines liability. If wages are paid in advance and no services have previously been performed by the employee, the place where the services are reasonably expected to be performed determines the state or territory where liability arises.
Where the place of payment of wages determines where liability arises, and an employee’s wages are paid into bank accounts in more than one jurisdiction, the place where the largest proportion of wages is paid determines the state or territory where liability arises.
Where the place where an employee or an employer is based changes during a month, the place at which they are based on the last day of the month is used to determine liability for tax.
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