The Mortgage & Finance Association of Australia (MFAA) today welcomed the announcement of a parliamentary inquiry into the New South Wales Payroll Tax Act. The Inquiry will specifically review the operation of the relevant contractor and employment agent provisions within the Act including relevant case law.
The announcement of the Inquiry is as a direct result of sustained engagement by the MFAA on this issue with critical stakeholders in the NSW Government.
“We are pleased to finally see action being taken on this longstanding issue for our members,” said MFAA CEO Anja Pannek. “We see this Inquiry as a clear acknowledgement that the application of relevant contractor provisions is flawed and needs to be reviewed.”
“At a time when access to finance for a home is more important than ever, this tax penalises mortgage brokers, the very businesses that enable home ownership. At the end of the day, this is a tax on NSW home borrowers,” Ms Pannek said.
“Yes – the Loan Market case has provided clarity in terms of exemptions for industry; however, the issue of retrospectivity, fines and penalties remains. This threatens the viability of broker businesses – many of which are the smallest of small businesses - and will lead to reduced competition and increased costs for NSW homebuyers.”
The long-dated payroll tax matter between Loan Market and Revenue NSW has demonstrated the need for payroll tax legislation in New South Wales to be reformed. In both the Loan Market decision in April and the Loan Market final orders in November, the court noted that the application of the law was ‘harsh’ and was a matter for Parliament to correct through amending legislation.
The MFAA also points to the NSW Government’s recent actions in the healthcare sector, where contractor General Practitioners (GPs) were granted payroll tax relief and exemptions. This sets a precedent for acknowledging the unique nature of independent contractor arrangements in different industries and the need for targeted reforms.
The MFAA will urge the Inquiry to consider a time-bound moratorium on retrospective payroll tax liabilities for aggregator/broker arrangements and to recommend legislative changes that bring clarity and fairness to the system.
This Inquiry is not just a state issue but a national one, as payroll tax laws are largely harmonised across Australia.
Ms Pannek said, “The challenges faced by our members in NSW are mirrored in other jurisdictions, making this Inquiry a critical first step in addressing these issues across other jurisdictions.”
Together with CAFBA and COSBOA, the MFAA will continue to work constructively on this issue, including to engage with the Inquiry on behalf of members.
