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Contractor provisions

Contractor provisions interactive help

Find out if you can claim any exemptions or deductions on payments you make to contractors.

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When you pay a contractor, you may be able to claim exemptions or deductions that reduce how much tax you need to pay.

A contractor is an entity that agrees to produce a specific result for an agreed price. Payments you make to contractors under a relevant contract are taxable.

You need to establish whether your workers are employees or contractors.

If you have an employer–employee relationship with a contractor, they will be considered an employee; and the contractor provisions will not apply.

Once you have determined that your worker is not an employee, answer the questions below to see what contractor provisions apply.

- Step 1 of 17

Is the worker an employee for payroll tax purposes? *

Has the contractor supplied your business with services for 90 days or less in the financial year? *

Based on the information you have provided, the 90-day exemption does not apply to this contract.

What type of entity is the contractor? *

Corporation
Trust
Partnership
Sole trader

Did 1 or more partners of the contractor perform the work in relation to the supply of services under the contract? *

Did the contractor engage 2 or more people to provide the services under the contract? *

Based on the information you have provided, the exemption for contractors engaging others does not apply to this contract.

Did the contractor engage 1 or more other persons (ie. not one of the partners) to perform work in relation to the supply of services under the contract? *

Based on the information you have provided, the exemption for contractors engaging others does not apply to this contract.

Did the contractor engage 1 or more other persons to help them provide the services under the contract? *

Based on the information you have provided, the exemption for contractors engaging others does not apply to this contract.

Does your business normally require this type of service (from either employees or contractors) for less than 180 days in the financial year? *

Based on the information you have provided, the 180-day exemption does not apply to this contract.

Does your business normally require the type of service provided by the contractor? *

Based on the information you have provided, the exemption for services not ordinarily required does not apply to this contract.

This question is specific to the service that is being provided by the contractor. For example, if your business regularly uses this type of service (even if you engage a wide range of contractors on an irregular basis to meet this need) you will need to answer 'Yes' to this question.

Does the contractor generally provide their services to the public? *

Based on the information you have provided, the exemption for services not ordinarily required does not apply to this contract.

Read the public ruling on contractor services not ordinarily required (PTA022) for more information.

Is the labour or service provided by the contractor ancillary to the supply or use of goods or equipment? *

Based on the information you have provided, the exemption for contractor services being ancillary to goods does not apply to this contract.

Read the public ruling on contractor services ancillary to the supply of goods (PTA033) for more information.

Is the main purpose of the contract to transport goods? *

Any services provided under the contract must be ancillary to the transporting of goods.

Based on the information you have provided, the owner-driver exemption does not apply to this contract.

Read the public ruling on the payroll tax exemption for payments to owner-drivers (PTA006) for more information.

Will the contractor use their own vehicle to transport those goods? *

The contractor can have hired, leased or borrowed the vehicle, as long as it has not been hired, leased or borrowed from the employer.

Based on the information you have provided, the owner-driver exemption does not apply to this contract.

Read the public ruling on the payroll tax exemption for payments to owner-drivers (PTA006) for more information.

Has the contractor supplied the service to at least 2 businesses in the same financial year? *

If the businesses are related or grouped for payroll tax purposes, you should respond 'No' to this question.

If the contractor ordinarily provides the type of service to the general public, you may apply for an exemption. See the public ruling on the exemption for contractors ordinarily rendering services to the public (PTA021) for more information.

For the business claiming the exemption, has the contractor performed the services for an average of 10 days or less per month? *

To work out the average number of days per month, only count the months in which the contractor provided the services. For example, if a contractor provides services to a business 12 days per month for 4 months, payments to that contractor are taxable.

Is the contract: *

solely for the sale of insurance policies offered by you?
for the provision of door-to-door sales of goods as opposed to services?
neither of the above?

Taxable wages

Based on the information you have provided, the payments may be taxable (less any wage-related exemptions such as payments to apprentices).

Next steps

Depending on your total taxable wages, you may be liable for payroll tax in Queensland. If you are not registered for payroll tax, use our taxable wages interactive help to see if you need to register.

90-day exemption

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on the contractors 90-day exemption (PTA035) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence that the contractor worked at your business for 90 days or less in the financial year. Find out more about record-keeping requirements.

Exempt—contractor engages others

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on contractors engaging others (PTA023) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence that the contractor employed 2 or more people to fulfil the contract. Find out more about record-keeping requirements.

Exempt—contractor engages others

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on contractors engaging others (PTA023) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence that the contractor employed another person to help fulfil the contract. Find out more about record-keeping requirements.

180-day exemption

Based on the information you have provided, the contract is exempt from payroll tax.

For example, if you pay 3 contractors to provide similar services for 100 days each in a financial year, those payments will be taxable if the contractors work consecutively. Part days and irregular days count towards the total days a service is required.

Next steps

Read the public ruling on the contractors 180-day exemption (PTA020) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence of the number of days your business requires that service in the financial year. Find out more about record-keeping requirements.

Exempt—services not ordinarily required

Based on the information you have provided, the contract is exempt from payroll tax.

This exemption will not apply if, in the financial year, the contractor derives 40% or more of it's gross trading income from your business.

Next steps

Read the public ruling on contractor services not ordinarily required (PTA022) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You are must retain evidence:

about the service provided by the contractor
how often your business requires that service
(such as advertising material) that the contractor supplies services to the public generally.

Find out more about record-keeping requirements.

Exempt—contractor services ancillary to goods

Based on the information you have provided, the contract is exempt from payroll tax.

The amount relating to goods or equipment must be more than 50% of the total contract amount. (The value must be reasonable or at market rates.)

Next steps

Read the public ruling on contractor services ancillary to the supply of goods (PTA033) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence that the goods/equipment is the major part of the contract. Find out more about record-keeping requirements.

Owner-driver exemption

Based on the information you have provided, the contract is exempt from payroll tax.

This exemption does not apply if:

the owner-driver has leased the vehicle from you

you make contributions, directly or indirectly, to expenses relating to the vehicle (running costs or maintenance).

Next steps

Read the public ruling on the payroll tax exemption for payments to owner-drivers (PTA006) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain details of the contractor and contract. Find out more about record-keeping requirements.

Exempt—contractor ordinarily renders services to the public

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on the exemption for contractors ordinarily rendering services to the public (PTA021) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence of the number of days the contractor worked each month. Find out more about record-keeping requirements.

Exempt—insurance contractor

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

See Payroll tax exemptions for contractor payments for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain documentation regarding payments to the contractor. Find out more about record-keeping requirements.

Exempt—door-to-door sale of goods

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on contractor provisions for door-to-door sale of goods (PTA007) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain documentation regarding payments to the contractor. Find out more about record-keeping requirements.

Taxable wages

Based on the information you have provided, the payments are taxable wages (less any deductions and GST).

Next steps

Depending on your total taxable wages, you may be liable for payroll tax in Queensland. If you are not registered for payroll tax, use our Taxable wages interactive help to see if you need to register.

Exempt—contractor engages others

Based on the information you have provided, the contract is exempt from payroll tax.

Next steps

Read the public ruling on contractors engaging others (PTA023) for more information.

If you are unsure about this exemption, contact us or seek advice from an appropriate adviser.

You must retain evidence that the contractor employed a partner and at least one other person to fulfil the contract. Find out more about record-keeping requirements.

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Last updated: 10 July 2024

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Overview
Registering
Payroll tax liability and taxable wages
Grouping
Exemptions
Calculating
Mental health levy
Lodging returns
Payment options
Public rulings and practice directions
Definitions