Payroll tax deductions on contractor payments

If you are required to pay payroll tax on contractor payments where the contractor provided materials and equipment, you may deduct an approved non-labour component from your taxable wages.

You must declare the entire payment (both labour and non-labour components) less any approved deduction as wages.

Use the approved percentages in the table below to work out the non-labour component deduction.

If a profession or trade is not listed, contact the Office of State Revenue in writing for advice at:

You should also deduct GST before calculating payroll tax.

Type of contractor Deduction from gross payment
Architects 5%
Blind fitters 25%
Bricklayers 30%
Building supervisors (who provide their own vehicles and inspect more than 6 sites per week) 25%
Cabinet makers, kitchen fitters 30%
Carpenters 25%
Carpet layers 25%
Computer programmers 5%
Draftspersons 5%
Electricians 25%
Engineers 5%
Fencing contractors 25%
Painters (who provide their own paint) 30%
Painters (who do not provide their own paint) 15%
Plumbers 25%
Resilient floor layers, vinyl layers 37%
Roof tilers 25%
Tree fellers 25%
Wall and ceiling plasterers 20%
Wall and floor tilers 25%

For more information, see the following public rulings:

Also consider...