This is a state based tax and is payable on all payments made to contractors who have a 'Relevant Contract'. A Relevant Contract is a contract of engagement with a contractor that does not meet one of the exemptions to Payroll Tax.
If UNSW has a Relevant Contract with a contractor, then UNSW will be liable for payroll tax on amounts paid to that contractor.
The exemptions are outlined in the various State & Territory Payroll Tax Acts. UNSW has categorised the exemptions as either:
- Upfront Exemptions
- Ongoing Exemption
Pay As You Go (PAYG) Withholding
The Taxation Administration Assessment Act 1953 - Schedule 1 Section 12-35 requires an 'entity' to withhold tax from payments it makes to employees.
PAYG Withholding will also apply to payments made to independent contractors, where the contractor:
- has entered into a voluntary agreement with the entity to have amounts withheld
- provides their work or services for a client of the entity under a labour hire arrangement, or
- has not quoted their Australian Business Number (ABN) to the entity
Superannuation Guarantee Contributions ('SGC')
Commonwealth legislation requires an 'employer' to make superannuation contributions for their 'employees' into a complying superannuation fund.
The definition of 'employees' also includes a person who works under a contract that is wholly or principally for their labour. Therefore SGC can potentially apply when UNSW is entering into an engagement with a Sole Trader Contractor or Consultant.
The legislation surrounding this issue is outlined in sec 12(3) of the Superannuation Guarantee (Administration) Act 1992.
The Workers Compensation legislation requires all 'employers' to have a workers compensation policy that covers their all of their workers.
If a Sole Trader or Partnership has 'workers', then they must take out a workers compensation insurance policy. However, the Sole Trader and Partners would not be covered by this insurance policy.
UNSW therefore requires all Contractors and Consultants, who have 'workers' to have their own Workers Compensation cover in place prior to being engaged.
If the Contractor or Consultant is a Sole Trader or Partnership without workers, and they suffer from any illness or injury arising from the performance of their Services to UNSW, then the Contractor or Consultant is solely liable and the Contractor or Consultant is therefore responsible themselves for effecting any personal accident and illness insurance to cover such circumstances.