Industry-specific payroll tax
Some industries have unique payroll tax issues. We have outlined a breakdown by industry sector to provide further information.
Cleaning and Security
Some businesses in cleaning or security industries incorrectly declare group members, falsely claim contractors exemption, or misunderstand employment agency provisions, which can result in significant payroll tax liabilities.
- If you get workers to work “in and for the conduct of” your client’s business, your cleaning or security business might be an employment agency. As an employment agency, you cannot claim contractor exemptions.
As a payroll processor, you must pass on payroll tax to the relevant state revenue offices.
- Some contracted payroll processors are not passing on payroll tax, even after receiving the funds from the employer. Employers must then meet their outstanding tax liabilities and attempt to recover the amounts already paid to the payroll processor.
Real estate businesses often make mistakes with conjunction arrangements and these mistakes can have significant payroll tax consequences.
- A conjunction arrangement is when real estate agents share commissions on the sale of a property. The arrangement is common and widely accepted within the industry.
- Generally, there are no payroll tax consequences for the commission paid under an external conjunction arrangement. However, there can be significant payroll tax consequences if an internal conjunction arrangement is treated incorrectly.
Building and construction
Some businesses in building and construction industry do not correctly apply the contactor exemptions.
If you engage contractors in place of employees to provide labour to your business, it is likely these payments are liable wages. Other common issues in relation to this industry are:
- Incorrectly believe that if a contractor has an Australian Business Number (ABN) or is incorporated, then the contractor is not liable for payroll tax. Payroll tax can capture payments to contractors who have ABNs and operate through various entities, for example, sole traders, companies, trusts and partnerships.
- Fail to maintain supporting evidence for exemption claims.