Payroll tax – Queensland OSR issues draft ruling…

15 December 2010 Topics: Tax and revenue

… But be careful, because it only tells half the story.

The Queensland payroll tax legislation was amended from 1 July 2008. The purpose was to harmonise Queensland’s legislation with other states. However, the effect was that Queensland adopted some of the harsher payroll tax rules already existing in New South Wales and Victoria.

The views of the Queensland Office of State Revenue as to whether a worker is an employee or independent contractor are set out in the new draft public ruling PTA 038.1D. (

The draft ruling summarises the case law and provides a list of factors for determining whether an employment relationship exists.

What the draft ruling does not do is discuss how payments to independent contractors can still be subject to payroll tax even if there is no employment relationship.

The 2008 amendments included new contractor provisions, which throw a very wide net to capture “relevant contracts”. Most contracts dealing with performance of services are caught.

The exercise for businesses dealing with independent contractors performing services for them becomes whether the contract is specifically excluded.

Businesses need to be careful when referring to the draft ruling. The existence of an employment relationship is not the only source of a payroll tax liability.



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