A director recently implemented new financial and management reporting software, but did not have the in-house expertise to provide the training. A training company was engaged under a written contract to provide the training at a cost of $105,000.
Although the training was completed over six months of the financial year, the invoices show that the training occurred for only 70 days in the financial year.
The 90 day exemption applies and payments to the training company are not liable for payroll tax.
An accounting business offers a wide range of accounting, tax and self-managed super fund services to their customers including bookkeeping, preparing financial accounts and lodging tax returns.
They use contractors to help with their more specialised services. Scott is one of the specialised contractors who audits the financial statements of self-managed super-fund clients. His services are provided on an ad-hoc basis, and he is the only person in the business who is able to provide this service.
In the last financial year, Scott provided his services for 143 days.
The business is unsure if the contract satisfies the 180 day exemption and refers to Revenue Ruling PTA 020. After reading the ruling, they determine that the service which Scott provides is required throughout the year.
They conclude that the contract is not eligible for the 180 day exemption. The 180 day exemption focuses on whether the service is required for less than 180 days, not on how many days the service is actually provided. The business provides their customers with self-managed super fund services. It’s part of their core business and is required all year round.
A cleaning company outsources cleaning work to subcontractors.
In 2015-16, the company paid a subcontractor $450,000. The payments were not declared as taxable wages in the 2016 annual payroll tax return as they believed that the contractor engaging others exemption applied to the arrangement.
No written agreement exists between the parties, and the company has no evidence to support its claim such as SafeWork records.
Information from other government agencies show that the subcontractor earned no revenue and engaged no contractors or staff. The subcontractor stopped trading in July 2016.
The onus of proof is on the company to show that they’re entitled to the contractor engaging others exemption.
In the absence of evidence and based on information available, the exemption cannot be claimed.
A fencing manufacturing company have employees that service customers in the Sydney metropolitan area. They engaged a contractor to service their customers in regional NSW.
A written contract was signed between the two entities. The terms of the contract included:
During the financial year, commissions totaling $50,000 were paid. With the payroll tax annual return due, the contractor considered whether they would be entitled to services ancillary to the supply of goods exemption since the contractor hires out and installs fencing.
The contractor only provides labour services in marketing and installing fencing owned by the manufacturer, and does not supply products under the contract. Since they do not supply goods which are ancillary to the labour provided, commissions paid are to be reported as liable for payroll tax.
Constance Chan is the CEO of a furniture company. In the 2012/13 financial year, the furniture company paid the Chan family trust $130,000 to design a new range of furniture. The furniture company did not include these payments as taxable wages in its 2013 annual return as they believed that the contractor engaging others and contractor ordinarily rendering services to the public exemptions apply to the arrangement. No written agreement exists between the company and the family trust for the supply of design services.
The company could not provide evidence to support its claim that the contractor ordinarily provided their services to the public. The CEO advised that the Chan family trust was engaged to undertake the design work, and she is the only one that does this work. She also confirms that her husband does not undertake any design. He does provide insight into her designs from a male perspective. For this reason, the company believed that the contractor engaging other exemption applies to the arrangement.
The company is not entitled to the contractor engaging others exemption as the CEO is the only person doing the work under the arrangement. The husband providing his insight is not work required to be undertaken under the arrangement. The family trust produces its 2013 financial statements that show that all its operating revenues came from the company. This confirms that they’re not entitled to the contractor ordinarily rendering services to the public exemption.
A shower screen company engages a number of contractors to deliver and install shower screens for customers. Each contractor is responsible for making sure that they have their own vehicle. Any running costs associated with the vehicles are fully paid for by the contractor.
Under the ruling, the contracts meet the first two criteria. However, the main purpose of the contract is not the conveyance of goods rather the installation of shower screens. The delivery of the shower screens is secondary to the installation service and, the third criteria is not met.
The contractors are not eligible for the owner driver exemption.