Your Payroll Tax Bill Does Not Move When The Desk Does

Payroll tax on offshore employees in Australia turns on one question, and it is not where the person sits. It is whether the wages are Australian wages. Pay someone through your Australian payroll and those wages stay in the payroll tax base for six months, whichever country the work happens in.

Outstaffer sells an Employer of Record service that changes the answer, so read on knowing I have an interest.

The Victorian right that did not start on 1 September

The Victorian Government announced in March that a right to work from home two days a week would be protected in law from 1 September 2026, in every workplace regardless of size.

On 1 September, nothing commenced.

The Equal Opportunity Amendment (Work from Home) Bill 2026 passed the Legislative Assembly on 30 July and has sat at second reading in the Legislative Council ever since. Parliament's own record says the Bill is still in the chamber, with a state election in late November. Every Victorian employer who spent the winter rewriting a flexible work policy is holding a document with no start date on it.

Payroll tax follows the wages, not the person

Somewhere in that frustration a founder decides to stop arguing about desks and put the next two roles where the argument does not apply. Usually the right instinct. It collides with a rule almost nobody reads.

Are wages paid to an overseas worker Australian wages?

Often, yes. Revenue NSW ruling PTA039 states that wages paid in New South Wales to an employee performing services wholly in another country for up to six continuous months are taxable there, and become exempt only once that period runs more than six months.

The trigger is your payroll, not their postcode.

What six months costs an Australian employer

Take a business already over the threshold, which most firms with 25 or more staff on Australian salaries are. Revenue NSW sets the rate at 5.45 percent on wages above $1.2 million for 2026-27, so every extra dollar is taxed at the top rate.

Put one person overseas on $5,000 a month, still paid through the Australian payroll. Six months of wages is $30,000, and the payroll tax on that is $1,635. Do it with three roles and $4,905 leaves the business across half a year for people who have never set foot in the country. Not a fortune. It also lands in the months when the hire has not yet paid for itself.

When does the exemption actually arrive?

Past the six-month mark, the State Revenue Office's own guidance says wages for the whole period fall out of the base. That makes the first six months a working capital question rather than a permanent cost, but only if somebody is tracking the date.

Related reading

• The hidden cost of getting your first offshore hire wrong
• How much offshore staffing actually costs in Australia

The honest counter, and what I would do

The strongest argument against caring is that most Australian SMEs paying someone in Manila never run it through an Australian payroll. They pay an invoice, no Australian wage exists, and the rule never bites. The odds of an audit over $30,000 of overseas wages are close to zero.

Both true. Here is why it still matters.

"Where are the wages paid, and who is the employer" also decides superannuation, PAYG withholding and whether Fair Work coverage travels with the person. It sits underneath the five-question test the Fair Work Commission actually applied, and it turns an invoice arrangement into an employment relationship you never priced. Payroll tax is the cheapest version of getting that wrong, which makes it a useful place to find out. Victoria has been here before, and the last round of state payroll tax changes sent employers looking overseas without anyone asking it.

Get advice on your own situation before acting on it, because the answer moves with the structure.

Decide the employer question deliberately rather than by accident. If the person is genuinely your employee, employ them in their own country and keep the wages out of the Australian base from day one. That is what an EOR does, and you can sign up and run the numbers on one role first.

So here is the real question. If a state parliament can leave your flexible work policy in limbo for four months, how much of your resourcing plan should depend on where anyone sits?