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The Mortgage and Finance Association of Australia (MFAA) has told the NSW Parliament that payroll obligations shouldn't be extended to brokers and aggregators.
In a recently-made-public submission, which was officially lodged on February 7, the brokering industry asked the NSW government to update legislation around the NSW Payroll Tax Act. According to the law, brokers are classified as employees of aggregators, making them liable to pay state payroll taxes.
But MFAA's Chief Executive Officer Anja Pannek said the legislation will have "devastating consequences" for both brokers and small brokerage firms.
“This law is outdated and unfit for purpose. We urge the NSW government to amend the legislation immediately and call on the Federal government to lead a national conversation on harmonising payroll tax laws," Pannek said. "Australia’s small businesses deserve a fair, modern framework that reflects today’s economic realities.
"After years of inconsistent interpretations in the law, it’s time for this legislation to be reviewed and corrected," she continued. "NSW taxpayers deserve clarity, fairness and a system that supports small business owners rather than penalising them for their productivity."
The MFAA estimated that brokers — whose average revenue streams are roughly $182,000 before wages, fees and expenses are paid — could end up paying an additional $68,000 in taxes under the legislation.
“Mortgage brokers operate independent businesses, serve their own clients, and maintain their own premises, supported by service providers such as aggregators," Pannek said. "They take on the risks and responsibilities of running a business, just like other small business owners. It’s difficult to understand why this broader context isn’t being considered fairly in the application of payroll tax.
“If you can [classify] a sole trader as an employee to levy payroll tax on them, then no one is safe,” she continued.
Currently there are no exemptions in the legislation for sole operators. However, there are some exemptions for brokerage firms that employ several brokers.
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.
At present, nearly three quarters of borrowers use brokers for their financial needs in Australia's loan market.
“Without brokers, consumers will have fewer choices and in turn face higher mortgage costs and more difficulty accessing credit, further exacerbating the housing affordability crisis in NSW," Pannek said. "This isn’t just a tax on brokers. It’s a tax on borrowers and families trying to secure a home."
