• Upfront fee paid to the establishment

    These instructions apply where the client pays an upfront fee to the establishment for the room hire and the service.

    Attention

    In all cases where an upfront fee for the room hire and service is charged by the establishment, the amount the client pays will include GST and the establishment will account for the total GST on the room hire and service.

    End of attention

    If the establishment has charged the worker a shift fee, or any other expense, the price paid by the worker will include GST. If requested, the establishment will be required to issue a tax invoice within 28 days of the supply unless the amount of the supply is $82.50 or less, in which case the normal substantiation rules apply.

    The way GST applies to any subsequent payment the establishment makes to the worker, or to the worker’s eligibility to claim GST credits, differs according to the worker’s ABN and GST status, as follows:

    The worker does not have an ABN

    If the establishment makes a subsequent payment to the worker for their services, PAYG withholding may apply if the worker is not able to quote an ABN.

    Under the PAYG system, if a worker is not an employee and supplies services to your business (establishment), but does not quote an ABN, the establishment will be required to withhold 46.5% from the payment to the worker and pay this amount to the ATO.

    The worker, who is not registered for GST, will not be able to claim GST credits for any GST amounts paid on business-related expenses.

    The worker has an ABN but is not registered for GST

    When the establishment makes a subsequent payment to the worker for their services, PAYG withholding will not apply if the worker can quote an ABN to the establishment when asked.

    The worker will not be able to claim the GST credits for any GST amounts because they are not registered for GST.

    The worker has an ABN and is registered for GST

    If the worker has an ABN and is registered for GST, the worker will charge GST on the value of their services to the establishment. The establishment will be able to claim GST credits for any GST amounts paid to the worker. For the establishment to claim GST credits for these amounts, it will need to obtain a tax invoice from the worker unless the amount of the supply is $82.50 or less, in which case the normal income tax substantiation rules will apply. Once requested, the worker will be required to issue a tax invoice within 28 days.

    If the establishment has charged the worker a shift fee, or any other expense, the price paid by the worker will include GST. The worker will be able to claim GST credits for any GST amounts paid. To claim GST credits for these amounts, the worker will need to obtain a tax invoice from the establishment unless the amount of the supply is $82.50 or less, in which case the normal substantiation rules will apply. Once requested, the establishment will be required to issue a tax invoice within 28 days.

      Last modified: 04 Jun 2014QC 16396