Contractors for payroll tax purpose
If your business is paying for contractors, you need to look closer on each contractor to see if the contractor is considered as a relevant contract for payroll tax purpose.
First of all, contractors can be a sole trader, trust, company, consultant and even partnership. The contractors share the common characters of: being paid for a result; providing own material and equipment to perform the job; free to accept or refuse the job; free to delegate the work to anyone or any other entities and in a position of making profit or loss.
There are 9 exemptions rules and you only need to satisfy one of them for the payment to be excluded from the payroll tax.
Services provide for no more than 90 days in a financial year. On the 91st day, the entire period will be subject to the payroll tax. And any length of working hours in a day is counted as a whole day.
Services required by the business for less than 180 days in a financial year. It is the type of service required by the business which is relevant. And it is not the extension of the 90-day exemption.
Services performed by 2 or more people.
Services ancillary to the supply of the goods
Services not ordinarily required by your business. A contractor must provides the same service to the general public and derives less than 40% of the gross income from your business in that financial year.
Services approved by the Commissioner as exempt
Services provided by an owner-driver. The contractor main purpose is to deliver the goods. The contractor has to provide the vehicle and can not be your employee. Courier cyclists are not regarded as owner drivers.
Services relating to door to door sales. The Sales person can not be the employee; he/she must sell directly to the general public and must sell goods at the buyer’s home or work.
Services relating to selling insurance. The contractor must hold an Australian Financial Services licence.
If you seek further advice, please don’t hesitate to contact our office.
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