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About Payroll Tax

Newbie

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Hi,

I work as IT contractor with my ABN for a client of a consultancy firm. Which means, I physically work with the client in their premise and at the end of the month, I send my invoice to the consultancy firm and they get money from the client and keep their commission and send me my amount to my bank account. So, technically, I am employed by this consultancy firm but work for that client even though the client actually took my interview, recruited me directly and then assign me to that firm as they do not process payroll for contractor themselves. Last month, the consultancy firm send me and email that I have to pay a payroll tax of 5.45% (NSW) of my total invoice amount for my ABN.

So, questions are,

1) is this something I should pay or the client or the consultancy firm?

2) is this tax deductable at the end of my tax return?

 

Thanks in advance.

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Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @ChatterboxCafe 

 

Payroll tax is a state tax that employers must register for if the wages they pay to employees exceeds a certain threshold.  The consultancy firm has most likely registered because the payments they make probably exceed the threshold. The current rate for NSW is 5.45% and the consultancy firm will be obligated to make payment to the NSW government when its due. The Revenue NSW website has more information about NSW Payroll tax including the due date for payment and how it works.

 

I recommend having a chat to the firm because even though you are a contractor the payments they make to you could be regarded as wages for this purpose. More information about contractors and exemptions for payroll tax can be found via the link.

 

We have answered a similar question before about payroll tax as a deduction for income tax calculation.

 

Hope this helps.

 

Thanks, Ari

 

 

2 REPLIES 2

Community Moderator

Replies 0

Hi @ChatterboxCafe 

 

Thanks for you question.

 

We will check it out and get back to you.

 

KylieS

Most helpful response

ATO Community Support

Replies 0

Hi @ChatterboxCafe 

 

Payroll tax is a state tax that employers must register for if the wages they pay to employees exceeds a certain threshold.  The consultancy firm has most likely registered because the payments they make probably exceed the threshold. The current rate for NSW is 5.45% and the consultancy firm will be obligated to make payment to the NSW government when its due. The Revenue NSW website has more information about NSW Payroll tax including the due date for payment and how it works.

 

I recommend having a chat to the firm because even though you are a contractor the payments they make to you could be regarded as wages for this purpose. More information about contractors and exemptions for payroll tax can be found via the link.

 

We have answered a similar question before about payroll tax as a deduction for income tax calculation.

 

Hope this helps.

 

Thanks, Ari