Labour hire payroll processors and payroll tax

Have you contracted your payroll processing function to another company who pays your employee wages, benefits, PAYG, superannuation and payroll tax on your behalf?

Audits have recently identified that some labour-hire payroll processers are not passing on taxes to the relevant state revenue office, even after receiving the funds from the employer.

Employers are then having to pay further amounts to meet their outstanding tax liabilities, while attempting to recover the amounts already paid to the payroll processor.

In the cases seen to date, the labour hire contracts are not genuine labour hire agreements, and the workers remain employees of the employer. In these situations, an employer remains the liable party and will have to pay the payroll tax to the state revenue office, regardless of having already paid monies for payroll tax to the payroll processer.

What you can do

Before entering into a labour hire contract with a third party, you should scrutinise the arrangements under the contract.

But if you have already engaged a payroll processer, ask for proof that they have passed on the payroll tax to the relevant state revenue office.

If you are still unsure, call us on 1300 300 734 for Queensland payroll tax, or contact the relevant state revenue office.

Notify us if you have been approached by labour hire entities wishing to establish this kind of arrangement—your information could protect others.

Find out more about payroll tax on employment agent or labour hire arrangements.

Last updated: 26 May 2020