Aggregators on the Verge of Facing Derailment Threats From the NSW Payroll Tax

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Industry leaders are concerned that the assumption made by Revenue NSW of aggregators being their brokers’ employers could significantly threaten the industry and force some small businesses to close their doors.

The decision has been met with strong opposition, as businesses feel pressure from the additional costs associated with payroll tax.

This would ultimately affect hundreds of small businesses and entrepreneurs who rely on these contracts to generate income. The assumption also creates uncertainty amongst these companies regarding how they should structure themselves and continue operating to avoid payroll tax liabilities.

The Payroll Tax Act of New South Wales (NSW) states that businesses must register for payroll tax if their total wages paid to exceed the specified monthly threshold. For the 2022/23 financial year, businesses in NSW are liable to pay 5.45% of taxable wages above the threshold of $1.2 million. This means that any business whose total wages paid exceed this amount will be required to register and pay payroll tax.

MFAA CEO Anja Pannek said, “Our main concern on this issue is the approach is effectively an additional and inappropriately levied tax on the smallest of small businesses in our industry.”

“We are committed to continuing to work with aggregators, industry participants, Revenue NSW and the NSW Government on this matter and to seek a sensible resolution.”

The provisions of the Act may apply to contracts between an Australian Credit Licensee (including an aggregator) and its Agents, according to the Revenue NSW website.

This means that when individuals enter into these types of agreements as a source of income, they may be subject to additional payroll tax liabilities. These liabilities often come as unexpected costs for small businesses struggling with limited resources and cash flow.

Hence, applying payroll tax on aggregators creates additional financial burdens that many small businesses cannot afford, especially during these difficult economic times. Businesses need clear guidance from Revenue NSW to structure their agreements appropriately and avoid unnecessarily large financial outlays that could threaten their existence.

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