Payroll tax and contractors in New South Wales
Revenue NSW's contractor guidance treats payments under a relevant contract as taxable, but not the part of a payment that is for materials, tools or equipment. It also has a rule for principal contractors: a principal without a subcontractor statement can be liable once the days shown in the table have passed after the financial year ends.
- By Book Keeping Pros
- Sources checked 15 Oct 2026
The rules in New South Wales
| What it is | Value | When it applies | Where it is set |
|---|---|---|---|
| Payments to contractors under a relevant contract are taxable | Yes | As published on 3 July 2026 | About this guide |
| Most days in a financial year a contractor can provide services and be exempt | 90 days | As published on 3 July 2026 | Chapters: Services provided for 90 days or less in a financial year |
| Services from a contractor who provides them to the public in the year can be exempt | Yes | As published on 3 July 2026 | Chapters: Services provided by a contractor to the public during the financial year |
| Services ancillary to the supply of goods are exempt | Yes | As published on 3 June 2026 | How to apply the contractor exemptions |
| The part of a contractor payment for materials, tools or equipment is not taxable | Yes | As published on 3 June 2026 | How payments to contractors are treated for payroll tax |
| Days after the financial year before a principal without a subcontractor statement can be liable | 60 days | As published on 3 June 2026 | Recovery of payroll tax from principal contractor |
Each rule is read from the source and provision shown; the sources are listed below. Checked 15 Oct 2026.
What it means for your books
- Contractor invoices that split labour from materials, tools and equipment let the books record those amounts apart, so the part Revenue NSW does not tax can be set aside from the labour.
- A principal contractor can file the subcontractor statement for each subcontractor with the contract it relates to. Since the NSW rule on a principal's liability depends on whether a statement is held as well as on the days in the table, a contract with no statement on file is worth flagging.
- Revenue NSW's guide limits the days in a financial year that a contractor can provide services and stay exempt. A dated log of the days each contractor worked, totalled for the year, gives that count something to rest on.
- For services ancillary to supplying goods, or from a contractor who provides them to the public in the year, a note on the contract file saying why the payment is treated as exempt keeps the reason with the record. Revenue NSW or your accountant can say whether a particular contract is a relevant contract.
General information
Sources
- Payroll tax guide: contractor exemptions
Revenue NSW. Page modified 2026-07-03 (DCTERMS.modified metadata), released 3 July 2026. Checked 16 October 2026.
© State of New South Wales through Revenue NSW Licence: Revenue NSW terms of use: copyright, State of New South Wales.
- Contractors and payroll tax
Revenue NSW. Page modified 2026-06-03 (DCTERMS.modified metadata), released 3 June 2026. Checked 16 October 2026.
© State of New South Wales through Revenue NSW Licence: Revenue NSW terms of use: copyright, State of New South Wales.
- Payroll tax thresholds and rates
Revenue NSW. 2025-26 and 2026-27, released 1 July 2026. Checked 15 October 2026.
© State of New South Wales through Revenue NSW Licence: Revenue NSW terms of use: copyright, State of New South Wales.
Bookkeeping for employers
Keep your books ready for the questions employers get asked
We look after day-to-day bookkeeping for businesses across Australia, so your records are up to date when you need them.