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EXCLUSIVE Industry veteran Mark Bouris has slammed the NSW government’s plans to impose a massive payroll tax on the industry as a ‘tax grab’ that would end mortgage broking in the state.
Revenue NSW — the division of the NSW government that collects taxes — contacted several aggregators and sub-aggregators earlier this year seeking payment for backdated payroll tax for their broker members.
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The issue focuses around NSW Revenue’s assessment that some brokers fall under a relevant contract that means they should be subject to payroll tax.
Yellow Brick Road (YBR) executive chairman Mark Bouris said claims by NSW government that brokers are employed by aggregators are “ridiculous” and show they are out of touch with how the industry works.
“Brokers are accredited directly with the banks,” Mr Bouris told The Adviser. “Aggregators are purely a platform provider to mortgage brokers. We don’t have any direction over them at all.
“This is a pure tax grab. If they can do it with us then they will do it with the real estate agents and all of the big builders. It’s a way of massively increasing their tax revenue. But if they do it to us, they will send the industry broke. They will run us out of New South Wales and kill the industry.”
If enacted, Mr Bouris believes the majority of borrowers will be forced to go directly to the banks, which could prove difficult given widespread branch closures across the state.
“They will have to somehow deal with a bank online. They won’t be able to negotiate a deal. They won’t know what the best deal for them is. It’s an absolute disaster from an economic perspective. It’s really quite outrageous,” Mr Bouris said.
The industry veteran went on to explain that the margins in mortgage aggregation are incredibly thin, leaving them with no ability to pay for a payroll tax on brokers.
“The payroll tax would be greater than the margin we receive,” Mr Bouris said, “You can’t pass it on to brokers because they can’t afford it either.”
In a letter to Revenue NSW and several members of Parliament, the MFAA said the state government has ‘no legal basis’ to hit the broking industry with a payroll tax.
The letter from the MFAA, seen by The Adviser, has gone to several key politicians, including the NSW Premier, NSW Treasurer, Minister for Customer Service, Digital and Small Business, Leader of the Opposition, shadow treasurer, and shadow finance minister.
In it, the association expressed “serious concerns” on behalf of its members in relation to the “unwarranted, unfair, and unreasonable actions undertaken by Revenue NSW regarding the application of the Payroll Tax Act 2007 (the Act) to the mortgage and finance broking industry”.
The MFAA said that the “erroneous and haphazard application of this tax, including retrospective fines and penalties by Revenue NSW threatens the financial stability of the industry”.
Several members of industry have been meeting with politicians this week to discuss the issue and highlight the financial devastation the tax could have on the industry. It could have far reaching consequences if other tax revenue offices decided to follow NSW’s lead.
[Related:Revenue NSW has ‘no legal basis’ to levy payroll tax: MFAA]
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