Page 2648 - Week 08 - Thursday, 14 August 2014
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of “their” employees as well as “us”, which would result in contractors paying somewhat less than 6.85% of gross whilst the recruiter would see a small % increase in their payroll tax bill. The recruiter replied with a resounding NO. The ACT government would collect the same amount of tax if the threshold were apportioned.
Another one:
Like many other contractors, the proposed changes to Payroll Tax legislation will remove the competitive position of small entities; something that I understood was originally intended to stimulate Government revenues through the small business sector. We are being forced to terminate and renegotiate contracts, requiring an investment of thousands of dollars in legal advice to defend against litigation.
I know some over there find this amusing and they are laughing at the position of small business, but I think it is rather serious. It continues:
We are also being forced to unnecessarily pay Payroll Tax on company operating expenses (also subject to GST and Company Tax) not just the Payroll component. This is because the Payroll Tax is withheld by the recruitment companies (deemed the “Employment Agent”) against the full fees they pay to our company. To further add insult to injury, as individuals, we are then forced to take a significant reduction in earnings of $10K-$15K p.a. if we are to keep our contracts with Government.
Again, members, this is the consequence of the bill that you will support tonight. Another one:
Unfortunately until the tax is properly bedded in, the employing agents (recruiters) are going to take the tax from their employees (contractors) which, as we know, will equate to approx. 7% cut in their salary. Although everyone seems to know that it is an employER tax, this unethical passing on initially DOWN the line seems unstoppable. As we have seen in one case, the contracts now just refer to “unexpected fees and charges”, so you get weasels everywhere and once again the ‘little’ man is squashed.
Playing with words.
One small point which still troubles me is that Mr Barr seems to regard ‘contractors’ as bigger companies, whereas the people who are going to be most directly hit were individual contractors employed through Recruitment agencies (who were simply going to pass on the tax to the small people).
It then refers to a Canberra Times article:
… seems to include this but still quotes Barr as if he doesn’t understand that it is the ‘little’ people who would be most directly affected and have no way to ‘absorb’ the cost but just take a salary drop.
They go on and this one highlights the government’s ignorance of the impact of the change:
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