Payroll tax on employment agents with government clients
Find out when tax applies to payments you make to contractors for their services to a government department.
A government client is one from any of the 3 levels of government in Australia—local (i.e. councils), state and Commonwealth.
As an employment agent, the wages you pay in Queensland to your on-hired worker for the services they provide to a government client may be exempt from payroll tax depending on which level of government the client is.
Read the public ruling on employment agency contracts for workers on-hired to government (PTA028) for more information.
Local government
Wages for workers on-hired to local government (councils) are exempt from payroll tax unless the service relates to certain activities. These activities are listed in section 14 of the Payroll Tax Act 1971.
State government
If you’re an employment agent who pays an on-hired worker for their services to a Queensland government department (including hospital and health services), you may be exempt from payroll tax on their wage, unless the worker is performing services for a commercialised business unit. If their wages are exempt, you don’t need to declare this payment as taxable wages in your return.
Section 14 of the Payroll Tax Act has more information.
Commonwealth government
Although the Commonwealth Government itself isn’t subject to payroll tax in Queensland, employment agents who on-hire workers to the Commonwealth Government are still liable for payroll tax on their wages.
There may be an exemption available. Read Public Ruling PTA028 for more information.
How to claim an exemption
To claim the exemption for the relevant wages, your government client will need to provide you with a declaration by exempt client form (Form P9). Where the services of the on-hired worker span more than 1 financial year, the government client only needs to complete this form once.
If additional workers are on-hired to the client to perform different services, another declaration form for the financial year will be required.
Read the public ruling on employment agency contracts and declaration by exempt clients (PTA026).
Also consider…
- Learn more about exempt wages.
- Read about labour-hire arrangements.
- Find a list of taxable wages.