Relevant contracts and payroll tax

You may have to pay payroll tax on payments to contractors engaged in relevant contracts.

For payroll tax purposes, a 'relevant contract' is any kind of arrangement where you:

  • supply services
  • are supplied with services
  • re-supply goods.

Re-supply means supplying goods to someone else who performs a service in relation to those goods and gives them back:

  • in an altered form
  • as other goods that incorporate them.

Relevant contracts are taxable unless an exemption applies.

If the contractor payments are taxable, you may claim an approved deduction from your taxable wages if the contractor provided materials and equipment.

Before you consider whether you are paying amounts under a relevant contract, look at whether the:

If you are satisfied that neither of these apply, you can then look at whether a relevant contract exists.

Use this flowchart to help you decide how much of your payments, if any, are subject to payroll tax.

Summary diagram of payroll tax for contractors

Also consider...