As part of its recent Budget announcement, the Victorian government has advised that from January 1, 2005, employment agencies will be liable for payroll tax for their on-hired workers, rather than the clients of the agencies as is currently the case.
Accountancy firm Pitcher Partners says this change will align the Victorian payroll tax provisions with all of the other states and territories, and also is consistent with the treatment applied to such payments under the state's WorkCover provisions, which will assist employers with meeting both of these obligations.
Other changes associated with this announcement include the preservation of the existing payroll tax exemption that applies to wages paid to workers on-hired to an entity that is exempt from payroll tax.
Not-for-profit group training organisations, which on-hire apprentices and trainees to host clients, will also be exempt from payroll tax in respect of the payments made to those employees.
Victoria's payroll tax exemption for apprentice/trainee wages was completely removed from December 31, 2003.
Meanwhile, Pitcher Partners points out that WorkCover 'grouping rules' came into effect from July 1, 2004.
These rules - similar to those previously introduced in Queensland - allow WorkCover to treat two or more employers as a single employer for WorkCover purposes and will apply to the one (or neighbouring) workplace(s) for the purpose of determining the predominant activity being undertaken and the relevant industry rate that will apply for the calculation of the insurance premium at that site.
The firm says there will be two circumstances when a group will exist:
- Related Corporations under section 50 of the Corporations Act 2001.
- Where there is the inter-use of workers between entities.
"These rules are very similar to the current Victorian payroll tax grouping rules with the noticeable exclusion of the 'controlling interest ' provisions.
"These provisions are very broad in their application and the Victorian WorkCover Authority can exclude member(s) from a group where there is the inter-use of workers and they are satisfied the business conducted by that member is independent of any other business conducted by the group," they say.