By Sharon Baldwin

Office of State Revenue focuses its attention on Payroll Tax in Queensland

The Newman Government strengthens compliance measures and is focusing on Payroll tax in Queensland.

Treasurer Tim Nicholls said the Government expected to recover an additional $34 million in 2013 from people who evade, mislead and misinterpret in a bid to avoid paying their tax bills.

In the 2012 financial year, Queensland Treasury reported $4.07 billion in payroll tax revenue, which formed one third of all revenue collected.

Mr Nicholls said additional resources and improved data matching between agencies would tighten the net.

"The Office of State Revenue (OSR) will have more sources of data and a greater number of investigative techniques so they can recover money that should have been directed towards frontline service delivery," Mr Nicholls said.

"OSR will focus its attention on companies that avoid payroll tax, businesses intentionally structured for tax avoidance, transactions where the data held by OSR and other agencies doesn’t add up, and individuals or businesses who misinterpret the rules.”

Of importance was the introduction of specific contractor and employment agent provisions in 2008. The OSR is currently enforcing the employment agent provisions in respect of contractors differently to how many businesses would regard the provisions as applying to them. These provisions require payroll tax to be paid on all payments to workers in instances where the employment agent pays a worker to provide services to clients in return for a fee. E.g. in the mining industry, many contractors are paid by reference to an hourly rate. Under the employment agent provisions all payments to subcontractors are subject to payroll tax.

The issue is compounded by the lack of guidance on the OSR’s interpretations of how the employment agent provisions apply to taxpayers. With the increased audit activity and the statement by Mr Nicholls that they are anticipating to recover an additional $34 million in 2013, taxpayers should consider their positions and determine if they have any potential shortfalls.

For information on liabilities, reporting obligations and eligibility criteria for the entire range of State taxes, duties and grants visit www.osr.qld.qov.au.

If you require further information please contact our office.