Loan Market decision a ‘national’ payroll tax issue, warns MFAA
The decision by the Supreme Court of NSW is likely to have implications for payroll tax beyond just NSW, the mortgage broking association cautions.
Brokers and aggregators across Australia have been warned that the Loan Market Group decision handed down in April is likely to impact parts of the industry operating not just in NSW but in other states as well.
Speaking in a recent webcast hosted by The Adviser, the Mortgage and Finance Association of Australia said there has been significant concern regarding payroll tax, particularly following the decision handed down by the Supreme Court of NSW in Loan Market Group Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC.
The Court found that payroll tax would apply to brokers in certain instances, with the final rulings on costs and penalties expected to be handed down on 6 September.
MFAA chief executive Anja Pannek said while a lot of the recent case law regarding payroll tax has been based in NSW, the implications of the decision could flow onto other states.
"What we know about payroll tax legislation is that it's harmonised right across the country with the exception of Western Australia. So this isn't just a NSW issue, it really is a national issue," said Pannek, speaking in a panel discussion on the webcast.
Pannek said the payroll tax legislation is an incredibly ambiguous piece of legislation when it comes to the application of arrangements between aggregators and brokers in the mortgage and finance broking industry.
"Where we find ourselves is that we now have a test case and while still subject to appeal, it provides some guidance potentially around what the path looks like going forward," she said.
"I think it's important to reflect on what it could mean for aggregators and more broadly for brokers in the industry."
PwC Australia partner Adam Nicholas said discussions he's had with revenue offices in other states suggest that they're equally looking at the issue and watching it.
"Their laws are the same so be prepared to answer some questions," Nicholas said.
Nicholas said it is not often that where there is an outcome that results in payroll tax being imposed, other states will decide not to.
The recent exemptions applied for payroll tax for GP clinics were a rare exception to this, he said.
It is also important to be aware that payroll tax is payable by a company in the state in which generally their workers are based, he said.
"So if you're a WA-based aggregator but you have workers based in NSW or other states, then you need to apply the rules of those other states."
