Payroll tax hit list

THE Commissioner of State Revenue has drawn up a hit list of 15 industries that will be targeted for contractor audits after the current payroll tax amnesty expires on June 30.

The hit list includes building construction and concreting services, consultant engineering services, motor vehicle repairs and panel beaters, real estate agents and valuers, and vegetable growers. The aim of the amnesty is to resolve uncertainty over the tax status of contractors.

Genuine contractors are not subject to payroll tax, but the Office of State Revenue has assessed that many contractors should be treated as employees for payroll tax purposes.

The commissioner, Bill Sullivan, said there had been “only a handful of declarations” under the amnesty, announced last November. However, there had been more than 800 contacts with the office, indicating a high level of awareness of the amnesty.

“While several large employers have indicated a voluntary declaration will be forthcoming, it is too early at this time to ascertain the effectiveness of the amnesty,” Mr Sullivan said.

He warned that the Office of State Revenue would have “little sympathy” for employers found on audit to have undeclared contractor payments.

Mr Sullivan said the 15 targeted industries were named because they were generally known to engage large numbers of contractors.

“This does not necessarily mean contractor payments in these industries will be subject to payroll tax,” he said.

“Employers in other industries also need to be aware the Office of State Revenue will be continuing its routine audit program, which will involve visits to around 1,000 employers over the next 12 months.”

Under the amnesty, employers have until June 30 to declare payroll tax obligations in relation to contractor payments where an employer-employee relationship existed.

Employers who accept the amnesty will have to make payments for the three previous financial years and the current year. Those who fail to take up the amnesty will leave themselves liable to payroll tax on five previous financial years and the current year, plus the added burden of penalties.