Employment agency contracts chain of on-hire declaration
This declaration is used to notify us of the liable party in relation to a chain of on-hire. Refer to Revenue Ruling PTA-027 for more information.
Under the anti-avoidance provisions in section 42 of the Payroll Tax Act 2007 (the Act), the Commissioner of State Revenue may impose a payroll tax liability on any party to the employment agency arrangement if this declaration is incorrectly made.
2. Chain of on-hire
A ‘chain of on-hire’ occurs when an employment agent on-hires a worker to another employment agent who in turn on-hires the service provider to its client.
3. Division 8 of Part 3
Division 8 of Part 3 of the Act imposes payroll tax on wages paid by employment agents to staff on-hired under employment agency contracts.
4. Employment agency contract
An employment agency contract is a contract under which a person (employment agent) procures the services of another person (service provider) for a client of the employment agent. Such a contract could be formal or informal and could be expressly made or implied.
5. Record keeping
This declaration must be kept by Agent 1 for 5 years. Agent 1 must ensure that this declaration can be readily produced upon request by the State Revenue Office.
6. Who is liable?
Revenue Ruling PTA-027 states that where there is a chain of on-hire, the employment agent (Agent 2) closest to the ultimate end user of the service provider is liable for payroll tax on the payment(s) made to Agent 1.