The Commissioner conducts regular audits to ensure the correct amount of payroll tax is collected.
In most cases, investigations begin with us contacting an employer by telephone or by mail. Certain records and documents may be requested, or an appointment arranged for an authorised officer to inspect relevant documentation. The authority to inspect records and documents is set out in Part 9 of the Taxation Administration Act 1997.
Registered employers, or employers required to be registered, must keep the proper books or accounts and retain those records for a period of five years to enable payroll tax liability to be determined.
The Payroll Tax Act 2008 contains a specific anti-avoidance provision (Section 47 of the Act) relating to payments made with the intention of avoiding or evading the payment of payroll tax. In addition, section 32(2A) provides that the relevant contract exclusion provisions do not apply if the Commissioner determines that the contract/arrangement was entered into with the intention, either directly or indirectly, to avoid or evade the payment of tax by any person.
A similar anti-avoidance provision applies to employment agency contracts which have the effect of reducing or avoiding payroll tax. In these cases the Commissioner may disregard the contract, determine who the employer is and determine that any payment made in respect of the contract is wages for payroll tax purposes (section 42 of the Act).
A General Anti-Avoidance Provision (GAAP) contained within the Taxation Administration Act 1997 also applies to the Act. The GAAP applies to schemes entered into with the sole or dominant purpose of obtaining a tax benefit.
The GAAP provides the Commissioner with the power to reassess the tax liability of a person or persons who entered into or carried out a scheme, in order to include the amount of the tax benefit that was obtained or that would have been obtained in any assessment of tax.