30 April 2024

Relevant Contractor Payroll Tax Provisions Extended To Financial Services

Holding Redlich


Holding Redlich, a national commercial law firm with offices in Melbourne, Canberra, Sydney, Brisbane, and Cairns, delivers tailored solutions with expert legal thinking and industry knowledge, prioritizing client partnerships.
The principle "that contractors are employees for payroll tax purposes unless exemptions apply" applies to the financial services industry.
Australia Finance and Banking
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In a previous article we discussed how the relevant contractor provisions in payroll tax legislation have been interpreted across the nation to deem contractors to be employees for payroll tax purposes unless exemptions apply – and critically the breadth of those provisions. A recent case in the NSW Supreme Court reaffirms what we shared then and elaborates on some of the principles.

Mortgage aggregators are liable for payroll tax on mortgage brokers' commissions

In the recent case of Loan Market Group Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 390 (Loan Market Group), the NSW Supreme Court held that mortgage brokers were deemed employees under the relevant contractor provisions. The Court also classified a mortgage aggregator as an employer who was liable for payroll tax on commissions paid to mortgage brokers.

The Court held that a relevant contract existed. Payments to the assessed brokers were "for or in relation to the performance of work relating to a relevant contract", rendering the commissions payable wages that were subject to payroll tax.

Building on our previous discussion, the focus here is on the breadth of the term "services".

In this case, the Court affirmed that the term "services" has a broad meaning and can include "an act of helpful activity", "the action of helping or doing work for someone" and an "act of assistance". By way of example, the mortgage broker's commitment to undertake work in a particular way was characterised as the performance of a service to the mortgage aggregator, even though it was also the performance of a service to a client for whom a loan was arranged.

The judge expressly stated that the outcome may be seen as harsh given the relevant contractor provisions were originally introduced as anti-avoidance measures and not intended to catch "bona fide independent contractors". However, the net of what is a relevant contract has been cast very wide by the law makers.


The wide relevant contractor provisions will be applied across many other industries beyond just medical and financial services, where services are provided to independent contractors and by intermediaries. A case involving the gig economy will be heard shortly in NSW.

Entities should carefully consider how payments made to independent contractors under a services agreement will be considered for payroll tax purposes.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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