Business warned on payroll tax scam

Treasurer Ben Wyatt has warned businesses using labour hire companies to confirm they have met their payroll tax obligations, after a number of local operators fell victim to a scam.

Department of Finance payroll tax audits showed an unknown number of payroll processors are collecting payroll tax revenue on behalf of clients through labour hire agreements, but not paying the cash on to the state government.

It follows allegations about Sydney-based Plutus Payroll last year, with the founder of that company reportedly arrested in May after the payroll company had failed to pass on pay-as-you-go income tax collection to the federal government.

Business News understands investigations by the Commissioner of State Revenue are still in the early stages, with a possibility that more victims may be found.

A number of the businesses hit by the scam signed contracts with payroll processors promising to take responsibility for all wage and tax payments, with the money paid by the business partially held by the processor.

Although the contracts are represented as labour hire agreements, Business News understands they are not genuine as the employees remain the responsibility of the employer.

That means the employer would be saddled with any potential unpaid liability.

Mr Wyatt urged businesses to check with the Office of State Revenue to determine if their liabilities were being paid.

"Similarly, employers considering using an external party to pay employee wages, benefits, PAYG, superannuation and payroll tax should conduct appropriate due diligence before entering such an agreement,” Mr Wyatt said.

 "The Western Australian government is collaborating with State Revenue offices around the country to share intelligence and ensure a co-ordinated approach is taken to raise awareness about this scam."