Financial Services

PAYG (Other) Policy

Further information

Certain types of income do not necessarily attract PAYG tax.

Policy statement

Allowances / per diems

Tax instalments do not have to be deducted from an allowance that is paid to an employee to cover 'travel expenses' incurred in the course of employment, provided that the rate of allowance is within what the Australian Tax Office (ATO) considers to be reasonable. Amounts within the reasonable limits are not shown on the employee's payment summary. 

'Travel expenses' for these purposes means expenses of accommodation, food, drink and incidentals in respect of travel within Australia and away from the employee's ordinary place of residence, where the travel is considered in the course of performing duties as an employee or for the purposes of producing any other assessable income.  The ATO consider an employee to be travelling where the duration of the travel is less than 21 days.

It is important to note that the above PAYG treatment of travel allowances is only applicable for employees of the University.  Where a visitor attends the University, it is necessary for UWA Human resources or Financial Services -Tax  to do a specific assessment of their eligibility for a travel allowance.

Reimbursements based on cents per kilometre

Where an expense payment is made that is worked out on the basis of distance travelled by the car, generally the University will not be required to withhold from the payment. If an individual has been reimbursed for more than 5000 business kilometres in a year then the University is required to withhold on the reimbursement in excess of the first 5000 business kilometres.

Academic study leave

Reasonable expenses claimed as per the section on allowances/per diems above will not be subject to PAYG withholding where the employee is travelling. However, if the academic intends to spend a long period of time interstate or overseas, the Commissioner may determine that he/she is living away from home (LAFH) or changing his/her usual place of employment.

If the academic is not travelling or LAFH then the allowance will be subject to PAYG withholding. Where the academic is LAFH, the allowance will be subject to FBT.

Superannuation guarantee charge

All Universities are subject to the superannuation guarantee legislation. A Superannuation Guarantee Charge (SGC) must be paid if an insufficient level of superannuation support is provided for the University's employees.

Under the SGC legislation an employer is required to provide a prescribed minimum level of superannuation support for most of its employees. Employers who do not provide enough superannuation support will have to pay a SGC.

The Univerity will need to make superannuation contributions for its employees to avoid paying the SGC. Most employees, whether full-time, part-time or casual, are covered by the SG legislation.

Exceptions include, but are not limited to, employees who are:

  • paid less than $450 in any calendar month; superannuation does not have to be provided in respect of that month
  • non-resident employees who are paid solely for work undertaken outside Australia
  • under 18 years old and employed part-time (that is, for no more than 30 hours a week)
  • employed for no more than 30 hours per week to do work that is primarily of a private or domestic nature.

Workers' compensation

Liability to provide workers' compensation also depends on the distinction between an employee and an independent contractor. The pivotal definition under the Workers' Compensation and Assistance Act 1981 (WA) is that of the term 'worker'. An employee and a contractor will be within the definition if he/she:

  • is engaged by another person to do work which is for the purpose of the other person's trade or business
  • is paid in substance for his/her personal manual labour or services.

The definition stipulates that the personal labour of the contracting party is needed. Thus a contract, which does not require the personal labour of the contracting party, is outside this definition. The interposing of a company, partnership or trust therefore removes from the University the liability to provide workers' compensation as those entities cannot provide labour.