Taxes, duties, levies and royalties
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Third party payments

If an employee or director provides services to a business, all payments for that service are liable for payroll tax, regardless of who makes or receives the payments.

Wages that your business pays to an employee or a director for services provided to your business must be included in your returns, even if they are paid:

  • to a person other than the employee or director
  • by a person other than the employer
  • by a person other than the employer to a person other than the employee or director.

Payments for services can include consultancy fees paid to or received by a third party.

Third party payments to an employee

A general manager receives:

  • $50,000 in salary
  • $10,000 in superannuation
  • $50,000 in administration fees, paid to the family trust
  • $50,000 in consultancy fees, paid to a family member.

The total amount of $160,000 in gross wages must be declared for payroll tax.

Third party payments to a director

A director is paid $75,000 a year in wages and superannuation. They also receive:

  • $200,000 to the family trust
  • $100,000 to one of their family members.

The total amount of $375,000 must be declared for payroll tax.

For information, read our common errors and case studies pages.