Employment agents

The Payroll Tax Act 2007 (the Act) also imposes payroll tax on amounts paid under employment agency contracts.

An employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (employment agent) procures the services of another person (service provider) for a client of the employment agent.

Effective from 1 January 2005, the employment agency contract provisions were amended to shift the payroll tax liability from the client of the employment agency to the employment agency itself.

For employment agency contracts where services are provided on or after 1 January 2005, the employment agency is liable for payroll tax on the wages paid to the on-hired worker under an employment agency contract.

Wages paid under an employment agency contract include:

  • any amount paid or payable to or in relation to the on-hired worker in respect of the provision of services under the employment agency contract,
  • the value of any fringe benefits provided to the on-hired worker, and
  • any payment that would be a superannuation contribution if made in relation to the on-hired worker in the capacity of an employee.


Under these provisions, there is an exemption available where the worker is on-hired to an employer that is exempt from payroll tax under Part 4 and Schedule 2 of the Act provided that the employer has made a declaration to the employment agency that they are in fact exempt.

An exemption is also provided for wages paid by approved group training organisations to new entrants (eligible apprentices or trainees).

Organisations that are exempt for payroll tax under Part 4 (other than under Division 4 or 5 of that Part, section 50 or clause 16 of schedule 2) include:

  • Charitable bodies,
  • Public benevolent institutions,
  • Religious institutions,   
  • Public hospitals,
  • Not-for-profit private hospitals,    
  • Some not-for-profit schools.   

Before an employment agent can claim this exemption, they must have obtained a written declaration from their clients who are exempt under Part 4 (other than under Division 4 or 5 of that Part, section 50 or clause 16 of schedule 2) of the Act.

Where do I declare these wages on my Annual Reconciliation?

The employment agent should show their taxable wages to on-hired workers, together with wages to their internal staff, in the Salaries and Wages category.

Further SRO References

See also Rulings:

GEN-001 Explanations and status of revenue rulings
PTA-026v2 Declaration by exempt clients for employment agency contracts
PTA-027 Employment agency contracts chain of on-hire
PTA-028 Employment agency contracts and workers on-hired to government
PTA-029 Recruitment agencies, placement agencies and job placement agencies


If you need further information on this topic, please contact our payroll tax enquiry service on 13 21 61.