Business claims hollow victory on contractor tax rates

BUSINESS appears to have had a win with the WA Government announcing that it will not continue with its controversial plan to drag employee-like contractors into the payroll tax net.

One of the main reasons given for abandoning the plan was the extremely high compliance burdens businesses would be forced to carry to implement the legislation.

It appears to some that this victory is a hollow one because the State Revenue Department already has powers to focus on such contractors and has been making greater use of them. The department has been targeting those who run display homes within the building industry and has handed out several five-year retrospective payroll tax bills to builders in recent months.

Ironically, the Government had announced that the housing sector would be exempt from its plans to trap employee-like contractors.

State Revenue also targeted the engineering sector this year, with several retrospective payroll tax assessments handed out.

Chamber of Commerce and Industry senior economists Dan Engles believes the scrapping of the payroll tax plan leaves the Government in an awkward position.

“The State Tax Commissioner said his powers were insufficient, so where does this leave him,” Mr Engles said. “It’s up to the Supreme Court to provide a ruling on what constitutes an employee-like contractor.’

The only major Supreme Court ruling on employee-like contractors was a case involving City Motors. State Revenue lost that one.

Mr Engles said this should be considered a win for business and that Treasurer Eric Ripper should receive credit for listening to business.

“The Government held consultation with business and we told them that the compliance costs would be too great. The Government listened to our concerns,” he said.

Master Builders Association of WA housing director Gavin Forster said it would be business as usual for builders on the payroll tax front.