Cleaning

As an employer in the cleaning industry, you must meet your payroll tax obligations.

Some cleaning businesses do not correctly declare group members and contractor payments, resulting in significant payroll tax liabilities.

Grouping

If your business is part of a group, you can only claim one threshold.

If your business is connected to another business, it’s possible they’re grouped even if there’s no common control or common ownership. Businesses may be part of a group if they have common employees. For example:

• when you set up an administrative entity to perform back office functions for your cleaning business
• when another cleaning business supplies you with labour and does not provide this service to the public.

You can read our case studies to find out more.

Employment agencies

If you have an employment agency contract with your client, you’re an employer and liable for payroll tax. If you get workers to work ‘in and for the conduct of the business’ of your client’s business, your cleaning business might be an employment agency. As an employment agency, you cannot claim contractor exemptions.

To determine if your cleaners work ‘in and for the conduct of the business’ of your client, we consider:

• the nature of your client’s business
• whether the cleaning services are performed during your client’s ordinary business hours
• the level of control (direct and indirect) exercised by your client over the cleaners
• where the services are performed
• whether the cleaners perform core duties
• whether the cleaners wear your client’s uniforms
• whether the client decides rostering, such as the number of cleaners and hours
• whether the cleaners are supplied at hourly rates.

For more information to help decide on whether particular arrangements constitute an employment agency contract, read Commissioner’s Practice Note CPN 005.

Contractors

If you’re not an employment agency, you may be able to claim contractor exemptions for your contractors.

Before you apply the exemptions, check if any of your contractors are employees. If they’re actually employees, you cannot claim a contractor exemption.

Anti-avoidance provisions

The payroll tax anti-avoidance provisions apply where an arrangement reduces or avoids liability for payroll tax. There does not need to be proof the arrangement was intentional. What matters is the effect the arrangement has on the payroll tax liability.

We examine the facts and circumstances of your cleaning business to work out whether to apply the provisions.

We disregard any arrangements, including contracts, when the payroll tax anti-avoidance provisions apply. Your cleaning business is then considered an employer and all payments are taxable wages. You’ll be given a notice outlining the details.

What you need to do

You should conduct an internal review of your cleaning business to determine the correct payroll tax treatment of payments made to all cleaners.

Unregistered businesses

If your taxable wages exceed the monthly payroll tax threshold in the current financial year, or the last four financial years, you must register for payroll tax.

Register for payroll tax now

Registered businesses

If you have not declared all liable amounts in your monthly payroll tax return for the current financial year, include these additional amounts in your annual reconciliation return. This is due on 28 July each year.

If you did not declare all liable amounts in previous financial years, contact us to make a voluntary disclosure. Voluntary disclosures attract a reduced level of penalty tax compared to cases where we identify the understatement.

Contact us

If you have a question about the cleaning industry and cannot find the answer on this website, contact us.