Contractor provisions
Contracts which provide for the payment to contractors and subcontractors for work they perform, are potentially liable for payroll tax under the Payroll Tax Act 2007. The contractor provisions apply even if the party to the contract is a company or personal service business.
There are nine types of exempt contract that are not included as liable.
Contracts that are included are called relevant contracts and the payments made under them are taken to be wages, and the workers involved are taken to be employees.
Employment agency contracts are not relevant contracts, and are dealt within Employment agency contracts.
It should be noted that the term contractor is a generic term that applies equally to consultants, out-workers, subcontractors, etc. The name or description given to the worker is not relevant. The important factor is that under the contract the worker provides services.
Where the contract worker is a person, and the contract is entered into with that person, it is necessary to determine if the worker is an employee or contractor before applying the relevant contract provisions.
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