NSW payroll tax audits and objections: records, grouping and contractors

From audit to assessment

An information request, proposed adjustment and assessment are different stages. Record the response deadline, periods and legal issues. Reconcile payroll reports with the general ledger, bank records, contractor payments, superannuation and returns. If an assessment follows, check the formal objection deadline even while discussing a correction with the auditor.

Current threshold and rate

For 2026–27, Revenue NSW lists an annual threshold of $1.2 million and a rate of 5.45%. The full threshold is not automatically available to each company. Grouping, interstate wages, part-year employment and the applicable deduction calculation can change the result. Apply the rates and law for each audited year.

Grouping: start with a map

Identify common control, related corporations, shared employees and relevant interests. Separate ABNs, separate accounts and different trading names do not themselves prevent grouping. Revenue NSW’s CPN 009 explains its approach to grouping and exclusion. An exclusion request requires evidence directed to the statutory discretion, not merely an assertion that the businesses are independent.

Provide ownership charts, deeds, registers, finance arrangements, employee sharing and actual operational links. Explain both connections and differences. Review which entity claims the group deduction and whether returns reconcile across the group.

Contractors and employment agents

An invoice or ABN does not resolve payroll tax. The relevant-contract provisions may treat certain service payments as taxable wages unless an exclusion applies. Test the actual contract, work, people and annual evidence for any exclusion. Employment-agent provisions are a separate route and should not be collapsed into the relevant-contract analysis.

Also reconcile wages, allowances, fringe benefits, superannuation, termination amounts and claimed exemptions. A payment can be treated differently for payroll tax, income tax and employment law. Explain why a particular exemption applies and keep its supporting records.

Medical centres: use current relief, not the historic audit pause

The 12-month audit pause announced from 4 September 2023 is historical. Current analysis includes PTA 041 on medical-centre contracts and CPN 036v2 on GP relief. The relief concerns qualifying contractor GP services; it is not a blanket exemption for all practitioners or employees.

CPN 036v2 describes relief for qualifying unpaid pre-4 September 2024 GP wages, without refunding tax already paid before that date. For later wages, the rebate has conditions including prescribed-billing proportions of at least 80% in Metropolitan Sydney or 70% elsewhere. Apply the definitions, location and relevant-year calculation to the actual centre.

Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 illustrates the importance of the actual contractual and payment arrangements. It is not a rule that every medical-practitioner payment is taxable. For platform or agency arrangements, check the current procedural status of the Uber Australia litigation rather than treating an intermediate appeal as the final word. The High Court case page for S170/2025 records an April 2026 hearing; no later disposition was verified for this guide.

Objection and external review

Ordinarily lodge a Revenue NSW objection within 60 days after service of the assessment or relevant decision notice. Use the current Revenue NSW objection process, identify each assessment and state the grounds fully with evidence and a replacement calculation. If late, address acceptance expressly. An objection does not suspend payment.

After determination, NCAT or Supreme Court review is generally subject to a 60-day period after service of the determination notice. Part 10 also contains a non-determination route after 90 days, excluding any statutory suspension, with at least 14 days’ prior written notice. Check the chosen forum, statutory conditions and service records before filing. The taxpayer bears the relevant onus; simply criticising the audit may not prove the correct liability.

Advisers and staged costs

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Ask for stages: initial issue and deadline review, evidence and calculation, objection, then external proceedings if justified. A fixed fee or cap may be possible for a defined stage, with assumptions and exclusions agreed. Do not compare prices without comparing document volume, years, entities and the deliverable.

Next-step checklist

1. Collect the audit letter, assessments and service dates.
2. Map all entities, owners, employees and relevant contracts.
3. Reconcile payments by entity, year, category and state.
4. Identify exclusions and evidence for each claim.
5. Prepare the alternative calculation and any penalty arguments.
6. Protect the objection deadline and address payment separately.

Official sources

• Revenue NSW — Objections and reviews
• Taxation Administration Act 1996 (NSW) — Part 10
• Payroll Tax Act 2007 (NSW)
• Revenue NSW — Thresholds and rates
• Revenue NSW — CPN 009
• Revenue NSW — PTA 041
• Revenue NSW — CPN 036v2
• High Court — Case S170/2025