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Taxation Determination

TD 92/191

Income tax: do the pay-as-you-earn (PAYE) tax instalment deduction provisions of the Income Tax Assessment Act 1936 apply to persons other than common law employees?

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FOI status:

may be releasedFOI number: I 1213685

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953, is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue.

1. Yes. The PAYE provisions apply to persons who receive salary or wages as that term is defined in the Act. The term 'salary or wages', as defined in subsection 221A(1), includes salary, wages etc paid to common law employees and covers other payments including payments made under a contract that is wholly or principally for the labour of the person to whom the payments are made. 'Principally', in this context, means more than 50%.

2. Both domestic and private payments made under a contract wholly or principally for labour are specifically excluded from the definition of salary or wages and, therefore, the PAYE provisions. These would include, for example, payments of a private or domestic nature made to a tradesman or a professional person.

3. In addition, payments which are covered by the prescribed payments system (PPS) arrangements are expressly excluded from the PAYE provisions.

Examples:

1.
A consultant is employed (for example by a government or a non-government body) and is paid under a contract principally for labour. Subject to paragraph 2 above, the PAYE provisions require the 'employer' to deduct tax instalments from payments made to the consultant.
2.
Similarly, the PAYE arrangements apply to payments made to self-employed people who are not covered by the PPS arrangements where those payments are made under a contract principally for labour.

Commissioner of Taxation
19 November 1992

Previously issued as Draft TD 92/D112

References

ATO references:
NO 92/4638-0

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 2129
IT 2137

Subject References:
PAYE
salary or wages
contracts for labour

Legislative References:
ITAA subsection 221A(1)

TD 92/191 history
  Date: Version: Change:
You are here 19 November 1992 Original ruling  
  8 September 1999 Withdrawn  

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