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Payroll tax is a state tax. It is assessed on the wages paid or payable to employees by an employer (or group of employers) whose total Australian taxable wages exceed the threshold amount. Each state and territory has its own payroll tax legislation, with different rates and thresholds.
As an agent or advisor (accountant, solicitor, tax agent, lawyer, payroll processor, legal and tax professional), you’re responsible for making sure your clients meet their payroll tax obligations.
Customer registration
Your clients, who pay wages in NSW, must register for payroll tax if their total Australian wages exceed the relevant monthly threshold.
You should monitor their wage levels to make sure they’re registered for payroll tax within seven days after the month they exceed the threshold.
Payroll tax awareness program
We run a series of payroll tax awareness programs so you can help your client meet their obligations. The programs highlight common errors and provide information on our online resources.
Compliance activity
Our compliance program ensures the integrity and fairness of the tax and benefit systems by:
educating and encouraging your clients to comply, and
detecting and deterring non-compliance.
We work closely with the Australian Tax Office (ATO) and other government agencies to share information and data. Last year we identified a payroll tax shortfall in eight out of 10 audits conducted.
Payments to contractors are liable for payroll tax unless one of these seven exemptions applies.
Services provided for 90 days or less in a financial year
Services required for 180 days or less in a financial year
Services performed by two or more people
Services ancillary to the supply of goods
Services not ordinarily required by your client’s business
Services provided to the public generally (as approved by the Commissioner)
Services provided by an owner-driver.
If your client wants to claim one of the seven exemptions, you must show sufficient documentation. For help on what records you should keep read, Commissioner’s Practice Note CPN 007.
Your clients may be grouped with other businesses for payroll tax under the following structures:
related corporations
common employees
common control
tracing of interests
subsuming.
Where a group exists:
the threshold entitlement is based on the proportion of NSW wages against total Australian wages
a single threshold deduction applies to the group
every member of the group is liable for any outstanding payroll tax of other group members.
If a payroll tax group exists, your client can:
appoint a Designated Group Employer (DGE) for one group member with the other group members being Non-Threshold Claiming (NTC) members. The DGE is the only member which can claim the payroll tax threshold, or
appoint one member to be the single lodger of the group who lodges on behalf of all group members.
If your client needs to appoint a DGE or single lodger, complete the appropriate application form:
If your client is an employment agent, they are liable for payroll tax on wages they pay to workers. The relevant contractor provisions are not applicable where a worker is provided under an employment agency contract.
For more information to help decide on whether particular arrangements constitute an employment agency contract, read Commissioner’s Practice Note CNP 005.
We work closely with industries to assist them with their up-front compliance. Our industry experts have identified common errors in these industries:
cleaning
meat processing
real estate
hire cars
security.
If you find an error
If a client fails to include all liable amounts in their monthly payroll tax returns for the current financial year, you should make sure they include them in their annual reconciliation return.
If you find any of your clients have failed to include all liable amounts in their payroll tax returns for previous financial years, contact us to make a voluntary disclosure. Voluntary disclosures attract a lower penalty compared to cases where we identify the problem.
Assistance for agents and advisors
We have information and tools to help you and your clients understand your obligations and to comply with payroll tax. We offer:
Payroll tax assist can help you work out if your clients are meeting their payroll obligations. By answering a series of questions you’ll be able to check whether they’re lodging and paying payroll tax returns correctly.