Bonuses
A bonus is a payment additional to an employee’s normal wage or salary. It is usually paid as an incentive or reward for some additional or outstanding service. Often it is paid out of profit realised as reward to those whose services have contributed to making of the profit. In the case of an employee, the payment of a bonus is ordinarily made as a voluntary gift, ex gratia, in recognition of the extent to which the services of that employee have contributed to making of the profit. Such payments are always taxable.
Often expatriates, who have worked in Victoria, will receive bonuses overseas which are paid by the overseas parent company as a result of the employer's performance or the group performance. From 1 July 2009, the new nexus provisions were introduced. Bonuses received are now subject to payroll tax in the state or territory where the services were performed in the month the bonuses are paid or payable.
Refer to Revenue Ruling PTA.039.
Commissions
Commissions are payments based on achieving sales and are usually calculated on a percentage basis. These are always taxable when paid to employees, whether they are the sole method of remuneration or paid in addition to a basic wage or retainer.
Further references
Also see Revenue Rulings GEN.001 and PTA-039.
Assistance
If you need further information on this topic, please contact our payroll tax enquiry service on 13 21 61.