8/4/2023 0 Comments Tax act contractor expenses![]() Payments to, or in relation to, contractorsĪn employer can exclude the GST component from those payments to contractors which are taken to be taxable wages under the Act. Consequently, there is no impact for payroll tax purposes. Ruling Payments to, or in relation to, employeesĮmployees’ wages and salaries are not subject to GST. This revenue ruling explains how the GST impacts on the calculation of an employer’s liability for payroll tax. ![]() Section 44 of the Act provides that GST will be excluded from wages (other than wages that comprise fringe benefits) in circumstances where a payment for a supply of services is taken to be wages under the Act and that payment includes an amount of GST. ![]() These include the supply of labour services by contractors and agency supplied staff. The GST has relevance to payroll tax because certain supplies which are subject to the GST are also subject to payroll tax. Each decision made by the Office of State Revenue is made on the merits of each individual case having regard to any relevant ruling.The Payroll Tax Act 2007 (the Act), which commenced on 1 July 2007, rewrites the Pay-roll Tax Act 1971 and harmonises the payroll tax legislation in Victoria and NSW.įrom 1 July 2000, the supply of most goods and services became subject to the Commonwealth’s Goods and Services Tax (the GST). Please note that rulings do not have the force of law. This Revenue Ruling is effective from 1 July 2007. If a profession/trade is not listed above, a principal may apply to the Chief Commissioner for a determination with details regarding the cost of materials and equipment provided by the contractor. Painters (who do not provide their own paint) Based on submissions made by employers and industry representatives, the Chief Commissioner has allowed the following percentage deductions: Type of contractorĭeduction from gross payments to contractorīuilding Supervisors (who provide their own vehicles and inspect more than six sites per week) Rulingĭeductions below are for the non-labour components where the contractor provides equipment and/or materials. The purpose of this Revenue Ruling is to set out those deductions for materials and equipment for certain types of contractors and to outline the manner in which new deductions may be granted. ![]() Caveat: The maximum allowance is still limited to the amount of income from business activity. Where none of the exclusions apply, section 35(2) of the Act allows the Chief Commissioner of State Revenue (the Chief Commissioner) to determine an amount which can be deducted from the payments made under the contract. Self-Employed businesses will be able to benefit from an increase of the amount they can expense from the Section 179 amount of 510,000 to 1,000,000 for business equipment like computers, printers and office furniture. While most contracts for the provision of services come within the meaning of ‘relevant contract’ under section 32 of the Act, certain types of contracts are specifically excluded from the definition of ‘relevant contract’. Deemed wages are subject to payroll tax under section 36 of the Act. Parties to a ‘relevant contract’ are deemed to be employers and employees (sections 33 and 34 of the Act) and payments made under a contract are deemed to be wages (section 35 of the Act). The Payroll Tax Act 2007 (the Act), which commenced on 1 July 2007, rewrites the Pay-roll Tax Act 1971 and harmonises the payroll tax legislation in Victoria and NSW. ![]()
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