Nexus arrangements that determine in which Australian jurisdiction wages are taxable are consistent across all states and territories to ensure that you do not become liable for payroll tax on the same wages in more than one jurisdiction.
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When wages are taxable in WA
Show moreEmployees providing services solely in Western Australia
If you employ wholly in one state or territory during a calendar month, as is the case for the majority of employees, you pay payroll tax in the jurisdiction where those services are performed. In other words, if you work solely in WA during the calendar month, you pay payroll tax only in WA for that month.
Employees providing services in more than one jurisdiction and/or overseas
Revenue Ruling PTA 039 ‘Nexus Provisions’ explains the nexus provisions and clarifies when wages must be declared in WA for payroll tax purposes. The ruling includes a flowchart to assist employers to determine if payroll tax is payable in WA.
To determine whether the wages paid or payable in a calendar month are subject to payroll tax in WA, we apply these tests in succession until it can be determined in which jurisdiction payroll tax should be paid.
- Test 1 - where the employee’s principal place of residence is located
- Test 2 - where the employer’s registered ABN address or principal place of business is located
- Test 3 - where the wages are paid
- Test 4 - where the services were mainly performed.
Services performed wholly in another country
Wages received in WA by an expatriate employee who is working in another country, or countries, are exempt from payroll tax if the assignment is for a continuous period of more than six months. The exemption from payroll tax applies for the whole assignment, including the first six months.
If the assignment is less than six continuous months, wages are taxable in the Australian jurisdiction where the wages are paid or payable. For the purposes of this exemption, wages are taken to be paid in WA if they are credited to a bank account or sent to an address in WA.
Services performed offshore
Any wages that relate to services performed offshore and beyond the limits of any Australian jurisdiction, but not in another country, are taxable in the jurisdiction in which they are paid, irrespective of the duration of the assignment. This would typically apply to oil rig workers - employees working on an oil rig would not be considered as working in another country unless the oil rig is physically located in another country.
Indigenous wages rebate
Show moreAn employer may apply for a Payroll Tax (Indigenous Wages) Rebate if wages are paid for new indigenous employees of employers, or grouped employers, with annual Australian taxable wages of up to $15 million.
- The employer must receive a Commonwealth Indigenous Wages Subsidy for those employees.
- The rebate applies to WA wages paid in the first two years of employment, starting on the day the employee first commenced employment with the employer. Eligibility requirements and related deadlines cannot be waived or extended.
- Lodge and pay your payroll tax returns as required. Full records of wages paid to new indigenous workers, including source documents verifying eligibility, must be maintained so you can provide the details during the annual reconciliation process. The rebate will be paid after the reconciliation process is completed, which is expected to be in August each year.
- Apply for a rebate by attaching the completed form to a web enquiry - select the ‘Indigenous Wages Declaration’ sub-category.
To qualify for this rebate, both the employer and the indigenous employee to whom the wages are paid must be eligible.
| Eligible employer | An employer is eligible for an assessment year if they:
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| Eligible employee | An employee is eligible for an assessment year if the employer receives or received an indigenous wages subsidy for them. An employee is a new employee if they:
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