| Revenue Ruling Public Ruling
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| Preamble From 1 July 2000, the supply of most goods and services became subject to the Commonwealth’s Goods and Services Tax (the GST). The introduction of the GST has relevance to pay-roll tax because certain supplies which are subject to the GST are also subject to pay-roll tax. These include the supply of labour services provided by independent contractors and agency supplied staff. As part of the arrangements in relation to the Intergovernmental Agreement on the GST, the Tasmanian Government introduced amendments to sections 2, definition of a “relevant contract payment”, and 2AB of the Pay-roll Tax Act 1971 (the Act) to ensure that the GST component of payments to contractors and employment agencies (for on-hired workers) would be excluded from pay-roll tax calculations. In addition to payments to contractors and employment agencies (for on-hired workers), the GST has an impact on the calculation of the Commonwealth’s fringe benefits tax. Taxable wages for pay-roll tax include the taxable value of fringe benefits in accordance with the Fringe Benefits Tax Assessment Act 1986 (the FBT Act). Therefore the impact of the GST on fringe benefits must also be taken into account when considering a pay-roll tax liability. The purpose of this ruling is to explain how the GST impacts on the calculation of an employer’s liability for pay-roll tax. Ruling Payments to, or in relation to employees Employee’s wages and salaries are not subject to GST. Consequently, there is no impact for pay-roll tax purposes. Payments to, or in relation to, contractors With effect from 1 July 2000, section 2, definition of a “relevant contract payment”, has been changed in the Act to ensure that the GST component of payments to contractors is excluded from pay-roll tax calculations. In effect, it provides that an employer can exclude the GST component from those payments to contractors which are deemed to be taxable wages under the Act. Example: Employer A engages Contractor B for 12 months. Contractor B invoices Employer A for $6,000 a month plus $600 GST. Assuming that the payments are not otherwise exempt under section 3A of the Act, the deemed taxable wages are $6,000 per month. Payments in relation to employment agency contracts With effect from 1 July 2000, a new section 2AB(2)(d) has been inserted into the Act to provide that the GST component of an amount charged by an agency to its client for the provision of on-hired labour is excluded from the deemed taxable wages for pay-roll tax purposes. Example: An employment agency provides a person to its client for ten days in a calendar month at $200 per day plus $20 GST. Deemed taxable wages for the month 10 days @ $200 per day = $2,000 Fringe benefits With the introduction of the GST on 1 July 2000, the taxable value of a fringe benefit may or may not include GST depending on the valuation rules applicable under the FBT Act. For pay-roll tax purposes, the taxable value of a fringe benefit provided during a period is the non-grossed up taxable value calculated in accordance with the FBT Act. Where the taxable value determined in accordance with the FBT Act includes GST, the GST amount is also included in the taxable value to be declared for pay-roll tax purposes. This ruling must be read subject to Revenue Ruling PUB-GEN-2001-1. Enquiries in relation to this Revenue Ruling should be directed to the Revenue Advice and Audit Section on telephone (03) 6233 5438 or email audithelp@treasury.tas.gov.au. Copies of this ruling may be obtained from our Web site at www.treasury.tas.gov.au and follow the “Revenue Rulings” link. Peter Coe COMMISSIONER OF STATE REVENUE |
