Where a contractor is engaged, payments for services under the contract are subject to payroll tax. They will remain so unless one of the relevant contractor exclusions applies. If none of the exclusions are satisfied, payroll tax is payable on the GST exclusive component of the contract's labour content only.
For more information refer to the Revenue Ruling: PTA008: GST Considerations for the Calculation of Payroll Tax Liability.
Payments for the labour content of relevant contracts will be subject to payroll tax whether or not the person supplying the services, or labour, does so as a natural person or through a company, a trustee (incorporated or unincorporated) or a partnership.
Termination payments made to contractors deemed to be employees under the relevant contractor provisions are also included for payroll tax purposes.
The Commissioner has issued a number of payroll tax rulings that explain the interpretation and application of the contractor provisions. For further information, refer to the Rulings Index.
Employment agency provisions were introduced that deem the employment agency to be the employer of its on-hired workers. Therefore, no payroll tax is payable on on-hired employees as this is the responsibility of the employment agency.