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Payroll tax

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90-day exemption

Contracts for services provided by a person who provides the same or similar service as the business itself may be exempt under the 90-day exemption.

Contracts are exempt if a person provides you with the same or similar services for a total of not more than 90 days in a financial year. On the 91st day, the entire period becomes liable for payroll tax.

Unlike the 180-day exemption, this exemption applies to the individual who is providing the service and focuses on the number of days an individual works for you.

A day is 1 calendar day, from midnight to midnight. Any length of time worked in a day will count as a whole day.

'Employee' and 'contractor' may have different meanings for payroll tax purposes from what you might expect.
Please review the meanings of employees and contractors to determine which definition applies to each employment arrangement. If the contractor has an employee/employer relationship with the principal, the contractor provisions will not apply.

 Example 1

A contract security officer works for Night Ltd for 80 night shifts (on non-consecutive days) in total for a financial year. The security officer works from 10pm to 6am in each shift. This means one shift is considered to be 2 days. Therefore, the security officer has worked for 160 days. All Night Ltd’s payments to him are liable for payroll tax.

Example 2

You contract Bob as a concreter for 30 days and to drive a cement mixer for another 75 days. Because Bob provides you with similar services for a total of 105 days, any amounts paid to him are taxable.

See Public Ruling PTA014—What constitutes a day's work? for more information.

Top call centre questions

Can I have more time to pay my periodic, annual, or final payroll tax liability?

You must pay payroll tax when it is due and, as a rule, we do not grant extensions.

If you are experiencing extreme financial difficulties, contact us before the date your return or assessment is due.

Unpaid tax interest will start to accrue if a payroll tax return is lodged and paid late. Penalty tax may also apply if you do not lodge a return by the due date.

I accidentally underpaid tax in a previous periodic return. Should I adjust this in my next periodic return?

No. Notify us in writing as soon as you become aware of the error and tell us how it occurred. We will reassess your payroll tax for that period using the correct figure for your taxable wages. You should pay any amount owing as soon as possible, as unpaid tax interest will be accruing daily.

If the error was in a periodic return during a previous financial year, we will reassess your liability for that year (and/or for the particular period), using the correct figure for your taxable wages.

I overpaid payroll tax in my last periodic return. Can I claim a refund?

Yes. Claim a refund within 5 years of the date of the overpayment in writing, outlining:

  • how the overpayment occurred
  • the amount of wages included in error
  • the return period in which you overpaid tax.

If we approve the refund, we may:

  • send you a cheque
  • apply the amount to your current payroll tax or revenue liability
  • hold the amount for liability arising within 60 days.

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Last reviewed 17 January 2012

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