Exemptions
The following 9 types of contract are not included as relevant contracts. The nine provisions do not apply to contracts of service (employee contracts) or employment agency contracts.
Payments made under these contracts are not considered liable wages for payroll tax.
- Exemption 1 - labour ancillary to supply of goods
- Exemption 2 - services not ordinarily required
- Exemption 3 - services of a type ordinarily required for less than 180 days
- Exemption 4 - services do not exceed 90 days in a year
- Exemption 5 - Chief Commissioner satisfied that contractor services the general public
- Exemption 6 - contractor engages labour
- Exemption 7 - owner drivers
- Exemption 8 - insurance agents
- Exemption 9 - direct selling agents
- Anti-avoidance provisions
Exemption 1
Contracts under which the supply of labour is ancillary to the supply or use of goods provided by a contractor
This exemption recognises that the basic purpose is to supply goods, and the labour or services provided by the contractor is only incidental to this.
Exemption 2
Contracts for services the business does not ordinarily require and which are provided by a contractor who provides such services to the general public
This exemption recognises many contracts are for services that businesses require on an intermittent basis and the contractor provides such services to other businesses and to the public generally.
Exemption 3
Contracts for services ordinarily required for less than 180 days in a financial year
This exemption is based on the number of days in a financial year that a business ordinarily requires services of a particular type - whether provided by contractors or employees.
If services of that type are provided by contractors and/or employees for 180 days or more, no exemption applies and all the payments are liable.
Exemption 4
Contracts under which a contractor provides services for up to 90 days in a financial year
This exemption applies to contracts where the services are provided for a period or periods which cumulatively do not exceed 90 days in a financial year. The exemption focuses on the individual who provides the services and looks at the total for that person’s separate engagements and any separate hirings of that person through corporate or other structures.
Exemption 5
Contracts that do not meet any of the above criteria, but the Chief Commissioner of State Revenue is satisfied the contractor provides services of that kind to the public generally within a financial year
This exemption allows for contracts to be exempted where the contractor provides similar services independently to the public generally and the following exemptions do not apply:
services not ordinarily required
services of a type ordinarily required for less than 180 days
services do not exceed 90 days in a year.
To qualify for an exemption you must submit a written request to the Chief Commissioner of State Revenue.
Exemption 6
Contracts under which the contractor engages additional labour to fulfil the contract
This exemption allows for payments made to a contractor to be exempt if:
the contractor engages others to provide the services they are contracted for
two or more people are needed to fulfil the purpose of the contract.
If the contractor is a partnership of two or more people, the exemption only applies if one or more partners and one or more employees provide the services. The exemption will not apply if the work is only performed by the partners.
Example
Peter is a plumber. He enters into a contract with a client to carry out some plumbing work. He performs the plumbing work which is the object of his contract. His spouse, Sharon only provides the plumbing business with administrative services such as maintaining the accounts and banking for the business. Administration work is not considered the object of the contract. This condition is not met.
The Chief Commissioner of State Revenue must be satisfied that the additional labour is supplied to fulfil the terms of the contract.
Exemption 7
A contract for the conveyance of goods in a vehicle provided by the person conveying them
The contractor must be an owner driver They must provide the vehicle and must have as the primary purpose of the contract to convey goods.
Exemption 8
A contract for services solely related to procuring persons who want to be insured by the employer
The person must be a genuine independent contractor conducting an agency business.
Exemption 9
A contract for services related to the door-to-door sale of goods solely for domestic purposes
A direct selling agent must sell goods directly to the public (must be the ultimate consumer) and the sale must be made at the buyer’s place of residence or employment.
This exemption only applies where the approach is unsolicited. It does not apply where a selling agent has been called out to provide a quote. The door-to-door sale must be for a good, not a service.
Anti-avoidance provisions
These exemptions will not apply where the Chief Commissioner of State Revenue determines that any part of the arrangement(s) was entered into with the intention of avoiding payment of tax.
