Employment agencies

Employment agencies (declarations)

Professional Health Personnel Ltd (PHP) supplies doctors to major public and private hospitals under employment agency contracts. In the 2019 financial year, PHP paid:

• $500,000 to doctors who went to public hospitals
• $400,000 to doctors who went to private hospitals (for profit)
• $100,000 to doctors who went to non-profit hospitals operated by an association.

As an employment agent, PHP is liable for payroll tax on all payments made to the doctors unless the payments would be exempt from payroll tax if the doctors were paid directly by the hospitals.

To claim this exemption, PHP must get a declaration from each hospital. The declaration must be made when the wages paid to the service providers (doctors) would have been exempt if they had been paid directly by the clients (hospitals) to the service provides as employee. The exemption will not apply when the hospitals do not pay payroll tax because their wages are below the tax threshold.

If PHP gets a declaration for the wages paid to its service providers engaged by public hospitals and non-profit hospitals, those wages will be exempt. However, payments made to doctors engaged by for profit private hospitals will need to be declared as liable for payroll tax.

PHP must continue to declare wages paid to employees:

• who are providing services to PHP such as in administration roles
• where service providers have been supplied to clients who are not exempt from payroll tax
• if a declaration for exempt clients is not obtained.

PHP cannot claim any contractor exemptions such as the 90 day exemption or providing services to the public.

Employment agencies (liable)

Super Clean Hotel Pty Ltd provides cleaning services to Budget Hotels NSW Pty Ltd. The contract between Super Clean and Budget Hotels has the following conditions:

1. Super Clean will provide cleaners at an hourly rate to clean and make hotel beds
2. Super Clean will ensure cleaners dress in Budget Hotels uniform
3. Budget Hotels will roster the cleaners depending on its requirements
4. Budget Hotels will provide the standing operating procedures and instructions.

The above conditions indicate that the cleaners are working in and for the conduct of hotel business. In this arrangement, Super Clean is acting as an employment agent by procuring cleaners to work for its clients. Based on this, Super Clean as an employment agent is liable for payroll tax and cannot claim any contractor exemptions.