Representatives from Australia's brokerage community met on Friday at a NSW Parliamentary hearing to discuss the ongoing debate about payroll taxes, which impact brokers.
According to the NSW Payroll Tax Act, brokers are classified as employees of aggregators, making them liable to pay state payroll taxes — an amount the Mortgage and Finance Association of Australia (MFAA) estimates could cost brokers as much as $68,000.
In February, the non-profit brokerage group lodged a submission with the NSW Parliament, asking the NSW government to update its legislation. MFAA argued that payroll obligations shouldn't be extended to brokers, and that the law had "inconsistent interpretations."
Fast forward to Friday, and MFAA's Chief Executive Officer Anja Pannek — along with Loan Market Group's Executive Chairman Sam White, and Commercial and Asset Finance Brokers Association of Australia's Chief Executive Officer David Bushby — appeared in front of Parliament to protest the legislation. The trio asserted that the legislation was outdated.
“Significant ambiguities still exist with payroll tax, presenting a real threat to the viability of small broking businesses and the ability of NSW borrowers to access a competitive home loan," Pannek said.
“Aggregators provide services to brokers. Brokers are independent small businesses. Brokers do not work for aggregators,” she added.
Bushby said the legislation has "potential for a detrimental impact on the economy." His organization represents more than 1,000 individual commercial and asset finance brokers nationally, and approximately 500 broking businesses.
"Assessment of payroll tax on the activities of commercial and asset finance brokers, would directly undermine the ability for those brokers to assist small businesses get the finance they need to grow,” Bushby said.
Loan Market's White urged the committee to "ensure the law’s scope is clarified, the drafting made clearer and its administration applied fairly [in order] to protect small businesses and the Australians they serve."
The original parliamentary inquiry into the NSW Payroll Tax Act was launched by the NSW government in November 2024 in an attempt to review contractor and employment agent provisions.
Currently, there are no exemptions in the legislation for sole operators. However, there are some exemptions for brokerage firms that employ several brokers.
The three representative groups encouraged Parliament to make four changes to the tax law, in a joint press release. The changes include:
1. Changing the Payroll Tax Act’s contractor provisions to reflect the original intent as anti-avoidance provisions, rather than capture bona fide contractors.
2. Requiring Revenue NSW to review CPN 016 in comprehensive consultation with the mortgage broking industry.
3. In the interim, providing immediate relief to the broking industry through an amnesty on audit and enforcement actions and ensuring no retrospective application of the current law.
4. A national dialogue is commenced to seek true harmonization of payroll tax laws, with a focus on reducing red tape and administrative burden on national businesses.
