Payroll software managers in NSW may be interested to know that you could be liable to pay payroll tax for contractors

Tax is not simple at the best of times - and a recent statement by the Office of State Revenue (OSR) in New South Wales has addressed possible misconceptions when it comes to payroll tax for contractors.

Many payroll software managers may be under the impression that if you hire a contractor you do not need to pay payroll tax for this person.

However the OSR emphasises that you may still be liable to pay this tax, depending on the relationship you have with the contractor.

If there is (still) what the OSR consider to be an employer-employee relationship, then the chances are high that you will have to pay this tax - an obligation that the office believes some real estate organisations have been avoiding.

As a result OSR will be auditing companies in the real estate industry over the rest of this year and into 2013 to try and identify any noncompliance.

To determine whether the relationship is employer-employee based, they will investigate factors such as how the worker is paid, continuity, hours of work, the level of control and direction over the worker and who bears the most risk.

If you believe that you may have missed some payroll tax obligations then the OSR encourages voluntary disclosure - if you approach them, in most cases penalties will be reduced.

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