Queensland Office of State Revenue Compliance Campaign

From January 2020, the Queensland Office of State Revenue’s (OSR) compliance program is focusing on contractor payments and employment agent contracts. OSR is encouraging employers to review their payroll details now. You can contact the OSR to make a voluntary disclosure of a tax liability before an investigation, you might avoid penalty tax.

The following contains essential information about employment agent contracts, contractors payments and how to they are treated for payroll tax in Queensland. In the security industry these situations may arise more regularly than people are aware. With the relevant and up to date information SPAAL members will be better equipped to consider and identify if it is necessary to make a voluntary disclosure of a payroll tax shortfall.

Payroll tax where an employment agency contract exists

Where a business enters into an agreement with a client for the provision of workers to provide services in the client’s business, the arrangement may be classified as an employment agency contract for payroll tax purposes.

In these situations, the payments to the service provider are taxable wages and the employment agent is not entitled to claim a contractor exemption or a non-labour deduction.

Example

ABC Pty Ltd is engaged by XYZ Pty Ltd to supply workers with certain skills and experience to work in XYZ’s business.

XYZ gives ABC the worker’s timesheets and payment based on those timesheets. ABC pays a portion of that payment to the workers.

In their payroll tax returns, ABC must include as taxable wages the:

• employee wages for its own staff (i.e. the wages for ABC’s administrative staff)
• entire value paid to the workers supplied to XYZ.

Because an employment agency contract exists, ABC is not entitled to claim a contractor exemption or a non-labour deduction on the amount paid to each worker.

Find out more about employment agents and payroll tax and OSR investigations

Payroll tax on payments to contractors

Did you know that payments you make to contractors and subcontractors may be liable for payroll tax? Even contractors that you believe don’t meet the ATO’s employee test for tax and superannuation purposes.

Find out more about:

• payroll tax on contractor payments
• record keeping for contractor exemptions
• OSR investigations

The Payroll Tax Australia website has two videos:

• Employee or contractor
• Contractor exemptions.

Making a voluntary disclosure early and accurately minimises Unpaid Tax Interest (UTI) on the shortfall, as well as any penalty tax that may apply.

Making a voluntary disclosure is as easy as emailing the details to payrolldisclosures@treasury.qld.gov.au.