Inquiry into the application of the contractor and employment agency provisions in the Payroll Tax Act 2007 (NSW)
The Tax Institute welcomes the opportunity to make a submission in response to the NSW Legislative Council’s inquiry into the application of the contractor and employment agency provisions in the Payroll Tax Act 2007 (NSW) (Payroll Tax Act).
In developing this submission, we have closely consulted with our members with specialist expertise in this area, including our National FBT and Employment taxes Technical Committee, and our NSW State Taxes Committee, to prepare a considered response that represents the views of The Tax Institute’s broader membership.
We commend the NSW Legislative Council for this inquiry, particularly considering recent legal disputes regarding provisions of the Payroll Tax Act. The Tax Institute strongly advocates for reform of the Payroll Tax Act. The existing ambiguity and inconsistent application of the law, stemming from the broad nature and drafting of its provisions, combined with member experiences of the current approaches of the regulator in testing the boundaries of the literal wording of provisions without necessarily affording full consideration to anti-avoidance intent, necessitate legislative amendments to align the regime more closely with Parliament's intent.
Our detailed response and recommendations to improve deficiencies in the Payroll Tax Act, as well as our views on the need for reform are contained in Appendix A.
Our submission is intended to be a starting point for further discussion and consultation. We consider it essential to ensure an ongoing dialogue between the NSW Treasury, Revenue NSW, and the tax profession, on the matters considered in our submission, and ways in which the Payroll Tax Act and its interpretation may be improved. Such an open and collaborative process will help to ensure the Payroll Tax Act is appropriate in the current environment and fit for future use.