Frequently asked questions: hiring resident employees exemption

What is the exemption and how does it work?

The exemption was announced as part of Budget 2018-19 to encourage the employment of Territory residents.

From 1 May 2018, as an employer, you may be eligible for a payroll tax exemption for up to two years in relation to wages paid to any of the following:

a Territory resident who, when hired, increases the total number of Territory residents employed in your business
an existing employee of your business, who relocates from living interstate or overseas to reside in the Territory as their principal place of residence
a Territory resident hired to replace a former employee who resided interstate or overseas.

Where you satisfy the eligibility criteria, you may be able to claim an exemption from the payroll tax that would otherwise be payable on the taxable wages of that employee.

On 17 March 2020 the hiring resident employee exemption was extended to new hires up to 30 June 2021.

What is a resident employee?

A resident employee is an employee who resides in the Territory as their principal place of residence.

Resident employees must be either full or part-time employees or employees working under a relevant contract.

Resident employees cannot be casual employees or persons under an employment agency contract.

What is the Baseline Count?

The ‘Baseline Count’ means the total number of full or part-time resident employees, including those employed under a relevant contract, employed as at 30 April 2018.

The following employees must be excluded from the baseline count as they are not resident employees for the purposes of the exemption:

casual employees
employees that reside outside of the Territory, such as employees who work remotely from interstate
employees employed under an employment agency contract
employees that reside outside the Territory who commute to work in the Territory such as fly-in fly-out workers.

Employers who hire additional Territory residents after 30 April 2018 over and above the Baseline Count may be eligible for the exemption in relation to the wages paid to those new hires.

What is your baseline count if you only commence to employ in the Territory after 30 April 2018?

The Baseline Count would be zero, however the Commissioner may vary this.

Example: I am an interstate-based company but have opened an office in the Territory after 30 April 2018. I employ both local and interstate staff in the Territory office.

The ‘Baseline Count’ means the total number of full or part-time employees, including those employed under a relevant contract, whose principal place of residence is in the Territory at 30 April 2018.

If an employer commences to employ in the Territory after 30 April 2018, by default they did not employ any resident employees on 30 April 2018 so their Baseline Count will be zero.

However, if you are a new business commencing or moving into the Territory after 30 April 2018, the Commissioner may vary your baseline count from zero, taking into account the circumstances of your business and level of new employment generated in the Territory.

Factors that may be taken into account in determining an appropriate Baseline Count are the nature of the business, the source of its employees and whether it competes with other similar businesses already in the Territory.

Are employees who were on unpaid leave, such as maternity leave, on 30 April 2018 included in the Baseline Count?

Yes. The Baseline Count includes all full and part-time resident employees employed as at 30 April 2018, including those on paid or unpaid leave.

What is a relocated employee?

Where you relocate an employee who resides outside of the Territory, to the Territory, you may be able to receive an exemption in respect of the employee’s taxable wages from the date they became a Territory resident.

You must be able to demonstrate that:

the relocated employee was employed by you but not a resident in the Territory at 30 April 2018
the Territory becomes the relocated employee’s principal place of residence on or after 1 May 2018 and before 1 July 2021.

The exemption for wages paid or payable to relocated employees is not dependent on an employer’s Baseline Count. That is, even if the relocated employee does not increase the employer’s total employment above their baseline count, the exemption may still apply.

What is a replacement employee?

Your business may be able to claim an exemption for replaced non-resident employees where you can demonstrate that:

the non-resident employee was employed by your business at 30 April 2018
the role previously filled by a non-resident employee is now filled by a resident employee
and the replacement of the non-resident employee took place within six months of the non‑resident ceasing employment.

The exemption for wages paid or payable to replacement employees is not dependent on an employer’s baseline count. That is, even if the replacement employee does not increase the employer’s total employment above their baseline count, the exemption may still apply.

How do I know if I’m eligible for the exemption?

In order to be eligible for the exemption, you must have:

increased your total number of resident employees above your baseline count by hiring new resident employees after 30 April 2018
or had a non-resident employee, employed by you as at 30 April 2018, relocate to the Territory as their principal place of residence
or replaced a former non-resident employee with a resident employee who performs the same role after 30 April 2018.

How do I claim the exemption?

Employers wishing to claim the exemption must use INTRA to lodge their monthly and annual returns.

INTRA is the Territory’s online lodgement facility and will calculate your entitlement to the exemption based on information you submit.

For each employee for whom you claim the exemption, you must retain appropriate records, such as:

evidence the person is a resident employee for the return period
evidence of the employment status and commencement date (for example, whether an employee works full or part time) on the last day of the month
for a relocated employee, evidence of the person’s employment as at 30 April 2018 and evidence of when the person became a resident employee
for a replacement employee, evidence to support:
- the non-resident status of the former employee at 30 April 2018
- the role performed by the former employee and the date employment ended
- the employment status, date of commencement and role performed by the new resident employee.

More information on INTRA can be found at https://treasury.nt.gov.au/dtf/revenue/intra

Where in INTRA do I claim the exemption?

Employers registered to pay payroll tax must lodge returns via INTRA.

When lodging a return you will now see an additional section called 'Local Employment Package' within the ‘Exempt Wages’ column relating to this new exemption. You can claim the exemption by completing the relevant fields in this section.

Which employee’s wages can an employer claim when their total number of resident employees goes above and below their Baseline Count over time?

Example: An employer’s baseline count is 30. In May they employ a CEO and an office manager making the May resident employee count 32. The employer can claim the exemption for wages paid to these two additional employees.

In June a different resident employee ceases employment (not the CEO or office manager) reducing the June resident employee count to 31. As the employer can now only claim the exemption for one employee, does the employer claim the exemption for the CEO or the office manager?

There is no chronological or ‘who was employed first or last test’ for the exemption. It is up to the company to choose if they wish to exempt the wages of the CEO or the office manager.

Are casual employees who reside in the Territory resident employees and do I include them in the monthly and annual returns?

No. A resident employee is a full or part-time employee who resides in the Territory as their principal place of residence. Therefore, casual employees are not included.

Do casual employees who become permanent or part time count as an increase to the total resident employees count?

Yes. This is because resident employees includes full and part-time employees only and excludes casual employees. Therefore, when a casual employee becomes a full or part-time employee the total number of resident employees has increased.

Example: On 30 April 2018 an employer employed 10 full time staff, 5 part-time staff, and 5 casual staff. In July 2018 two of the casual staff were made part-time, and in September 2018 the other 3 casual staff became part-time staff too. All staff live in the NT as their principal place of residence.

In this example:

the employer would have a ‘Baseline Count’ of 15 because that was the total number of full time and part-time employees at 30 April 2018
the employer would have a total of 17 resident employees as at 31 July 2018
the employer would have a total of 17 resident employees as at 31 August 2018
the employer would have a total of 20 resident employees as at 30 September 2018.

Therefore, the employer would declare 17 in the ‘Number of resident employees’ field in their July and August returns, and 20 in their September return.

When an interstate employee relocates to the Territory, or I replace an interstate employee with one who resides in the Territory, do I claim them as a relocated or replacement employee, or as an increase to my total number of resident employees?

Both. An employee who meets the relocated or replacement employee criteria should be declared under that exemption in your returns by declaring them in the ‘Number of Relocated/Replacement Employees’ field.

However, each month you are required to declare the total number of resident employees that you employed. As these relocated or replacement employees reside in the Territory as their principal place of residence, they also meet the definition of being a resident employee. As such, they will also be included in your total resident employee count and should also be declared in your monthly returns in the ‘Number of Resident Employees’ field.

In order to avoid these employees being exempted twice, any employees declared in the ‘Number of Relocated/Replacement Employees’ field must also be declared in the ‘Non-Eligible Employees’ field so they are deducted from the resident count exemption.

Can I claim an interstate employee hired after 30 April 2018 who I later replace with a Territory local?

The replacement employee does not meet the exemption criteria, however they do qualify as a resident employee.

Example: After 30 April 2018 an employer hires an employee whose principal place of residence is interstate and then replaces that first employee with a second employee who is a Territory resident. Does the employer claim this second employee as a replacement employee or as part of their total resident employee count?

The replacement employee exemption only applies to employees who meet all these requirements:

they were employed after 30 April 2018
they were hired to replace a former employee who lived outside the Territory
the former employee was employed on 30 April 2018
the replacement occurred within six months of when the former employee ceased to be an employee.

As the first employee was employed after 30 April 2018, the second employee cannot be exempted as a replacement employee. Instead, as the principal place of residence of the second employee is the Territory, they are a resident employee. If the total number of resident employees is above the Baseline Count, the wages paid to this employee will be exempt.

The employer would declare this employee in their total resident employee count in their returns in the ‘Number of Resident Employees’ field, and not include them in the ‘Non-Eligible Employees’ and ‘Number of Relocated/Replacement Employees’ fields.

Can I claim an interstate employee hired after 30 April 2018 who later relocates to the Territory?

The employee does not meet the criteria of a relocated employee, however they do qualify as a resident employee.

Example: After 30 April 2018 an employer hires an employee whose principal place of residence is interstate. This employee later relocates to the Territory so the Territory is now their principal place of residence. Does the employer claim this employee as an exempt relocated employee?

The relocated employee exemption only applies to employees who meet all these requirements:

they were employed on 30 April 2018
they resided outside the Territory
they have now relocated to the Territory permanently.

As the employee was employed after 30 April 2018, they cannot be exempted as a relocated employee. Instead, as their principal place of residence is now the Territory, they are now a resident employee. If the total number of resident employees is above the Baseline Count, then the wages paid to this employee will be exempt.

Where an interstate employee relocates to the NT during the month, do I declare the wages paid to that employee for the whole month as exempt or only for wages starting from a particular day?

For the whole month.

If I didn’t nominate a baseline count in my April 2018 return, how do I do that now?

Please email our office at ntrevenue@nt.gov.au providing your details and the baseline count you wish to declare. We will update your baseline count in INTRA and let you know once done.

Do I count all resident employees I hired and let go in my resident count, or just the number I still have employed on the last day of the month?

You only count the number of resident employees you have still working for you at the end of the month.

Example:

If your baseline count is 30
and at 31 January 2019 your resident employee count = 35
and on 15 February 2019 you hire 2 new resident employees
and on 20 February 2019 4 of your resident employees who were originally employed by you after 30 April 2018, leave.
then the February 2019 resident employee count is 33 and not 37, as this was the number of resident employees still employed by you on 28 February 2019.

This means that the wages paid for the period 1 Feb – 20 Feb to the 4 employees who left during the month, cannot be claimed as exempt.

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