Income tax: is a person working as an escort through an escort agency an employee for Pay-As-You-Earn (PAYE) tax purposes?

Generally yes. Whether or not a person is an employee for PAYE purposes, under section 221A of the Income Tax Assessment Act 1936, is a question of fact that must be determined according to the circumstances of the particular case. However, the assumption by the escort agency of responsibility for a number of the following activities would point strongly to the escort being an employee for PAYE purposes: (a) advertising; (b) receiving incoming client calls; (c) arranging contact between client and escort; (d) setting prices for services; (e) credit card facilities. Note: This is not intended to limit the factors determining whether someone is an employee. A more complete description of "employee" is contained in Taxation Ruling IT 2129.