ATO revises TR 2013/1: What does this mean for short-term business travellers to Australia?

On 23 September 2026, the Australian Taxation Office (ATO) issued a revised version of Taxation Ruling TR 2013/1, which sets out the Commissioner’s approach to identifying the “employer” for the purposes of the short-term visit exception under the employment income articles of Australia’s double tax agreements.

While the changes are quite technical, they are important for multinational organisations with employees travelling to Australia on short-term assignments or business trips, particularly where those employees remain employed and paid by an overseas group entity.

At its core, the revised ruling changes the way organisations should think about a relatively simple question: who is the employee’s employer while they are working in Australia?

Why does it matter?

Under Australia’s double tax agreements, employment income relating to duties performed in Australia will generally be taxable in Australia.

However, a short-term visit exception may apply where certain conditions are satisfied. While the precise wording varies between treaties, these conditions commonly include:

• That the employee does not exceed the relevant 183-day threshold
• Their remuneration is paid by or on behalf of an employer that is not an Australian resident
• The remuneration is not borne by a permanent establishment or fixed base that the employer has in Australia.

It is therefore important to determine who the “employer” is for treaty purposes, but this is not always straightforward. For example, an employee may retain an employment contract with their overseas employer, remain on the overseas payroll and continue to receive their salary offshore, while performing their day-to-day activities for an Australian group company.

In these circumstances, the contractual arrangements and the practical operation of the assignment may point to different entities. Whether the overseas or Australian entity is considered the employer can directly affect the employee’s eligibility for treaty relief and, consequently, whether their employment income is taxable in Australia.

So, what has changed?

The revised TR 2013/1 reflects developments in Australian case law concerning the ordinary meaning of an employee and aligns the ATO’s approach more closely with the principles contained in TR 2023/4.

Previously, TR 2013/1 involved a broader “substance over form” analysis when determining who the employer was. This economic employer approach required employers to look beyond the contractual employment arrangements and consider the practical reality of the assignment, including what the employee was actually doing in Australia and the nature of their relationship with the Australian entity.

Under the revised approach, greater importance is placed on the legal rights and obligations established between the relevant parties. It is no longer sufficient to look principally at the economic or practical aspects of the arrangement and determine which entity appears to be the employee’s employer in substance. Instead, where appropriate contractual arrangements are in place, considerably more attention needs to be given to what those arrangements actually provide.

The change may also have implications beyond income tax and Pay-As-You-Go (PAYG) withholding. Where an employee qualifies for treaty relief and their employment income is exempt from Australian tax, there may be no PAYG withholding obligation. As the Fringe Benefits Tax (FBT) definition of an employer is linked to PAYG withholding, this may also mean that benefits provided to the employee are not subject to FBT.

What should employers do?

Multinational organisations relying on the short-term visit exemption should consider reviewing their existing arrangements for employees travelling to Australia.

In particular, employers should consider whether:

• Their employment, assignment and intercompany agreements are consistent with the intended employment arrangement
• Positions historically taken under the short-term visit exemption remain supportable under the revised ruling
• Any change to the employer analysis could result in Australian income tax, PAYG withholding or reporting obligations, and may also have flow-on implications for the FBT treatment of benefits provided to the employee.

For organisations with significant numbers of internationally mobile employees, the revised ruling is also a timely reminder to consider the employer analysis before an employee begins working in Australia, rather than when dealing with the Australian tax and payroll consequences retrospectively.

How BDO can help

For multinational organisations with employees travelling to Australia on short-term assignments or business trips, BDO’s employment tax specialists can help assess how the revised TR 2013/1 may affect existing arrangements. We can review employment, assignment and intercompany agreements, evaluate whether positions taken under the short-term visit exemption remain supportable, and identify potential Australian income tax, PAYG withholding, reporting and FBT implications.

We can also help organisations establish practical processes for assessing the employer relationship before employees begin working in Australia, and align assignment documentation, tax treatment and payroll settings with the intended arrangement. To discuss how the revised ruling may affect your internationally mobile workforce, contact your local adviser.