Australia: Employment Taxes Update

Our colleagues at Greenwoods & Herbert Smith Freehills have released their Employment Taxes Update (April to July 2018 edition).

Highlights are:

1. Payroll tax on service contracts: The payroll tax employment agency contract rules were held to apply to a service contract for a result where the workers are integrated with the client’s business – addressed in more detail in this separate article. The contracts in question involved hotel room cleaning and make up. Importantly the judge said building renovation sub-contracting is not integrated, so would not also be caught.
2. FBT exempt vehicles: The ATO finalised the permitted minor private use for FBT exempt vehicles at 1,000km in its guidance (capped at 200km per return journey), plus up to 2km minor side trips each day to and from work.
3. Outbound tax residency: The “permanent place of abode” test to lose tax residency was held to require an Australian individual to move into a specific foreign address that is intended to remain home for the entire stay in the foreign locality. The individual in the case took a 12 month lease of a family apartment in Bahrain while looking for a house to buy in the same city. Since the apartment was not intended to remain home, he was still assessed on his salary in Australia that year. The decision has flow on FBT implications for employers sending Australians on foreign secondment.

To discover more, click here.