Login
ISCOVER
Revenue NSW has ‘no legal basis to levy payroll tax on the industry’, the MFAA has said in a letter to Revenue NSW and several members of NSW Parliament.
The Mortgage & Finance Association of Australia (MFAA) has written to Revenue NSW — the division of the NSW government that collects taxes — and several key members of NSW Parliament to flag its ‘serious concerns’ with the application of payroll tax to the mortgage broking industry.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
It comes after Revenue NSW seeks backdated payroll tax from up to eight years ago, amounting to tens of millions of dollars.
While the tax is self-assessed, the industry’s understanding of the application of the law and the revenue office’s application differ (and are currently the subject of legal proceedings).
The office has been issuing penalty notices to aggregators for failure to pay the tax, as it suggests that brokers fall under the ‘relevant contract’ provisions.
The move has been widely condemned by broker associations and aggregators alike.
The MFAA has now written to several key players in NSW government to flag concerns over the issue and called for a moratorium until clarity has been had.
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”.
“This places at risk the ability for home borrowers and business owners in NSW to access the services of a broker for critical credit assistance. This is at a time when access to credit for economic recovery and managing NSW household cost of living pressures, in particular a mortgage, is critical for the state,” the letter read.
The MFAA has also flagged that a number of the matters under review by Revenue NSW have been pursued for multiple years because of “a lack of clarity provided by the Commissioner’s team”.
“The erroneous application of this tax coupled with retrospective fines and penalties threatens the financial stability of and introduces extra cost to the sector, for both aggregators and mortgage and finance brokers,” the letter to Revenue NSW read.
The association has now asked the NSW Premier Dominic Perrottet to “urgently meet” with them so the association’s concerns “can be appropriately addressed”.
These concerns include:
- Clarification in law of the application of the Act to the mortgage and finance broking industry. The MFAA said that the law is currently “unclear and is creating deep uncertainty for the industry”.
- That the law be clarified, either through court and/or by way of amendment to legislation with retrospective effect.
- That Revenue NSW suspend by way of a moratorium, all current activity against the mortgage and finance broking sector in NSW until there is certainty for the industry, either through case law or by legislative change. This includes requests for information, audits, and assessments.
- That Revenue NSW withdraw all fines and penalties levied or proposed on industry participants until the legal position is certain.
MFAA ‘urgently calling for a moratorium on any action against the mortgage and finance broking industry in NSW’
Speaking about the letter, MFAA chief executive Anja Pannek commented: “The MFAA’s longstanding position is that Revenue NSW has no legal basis to levy payroll tax on the industry. The regulator’s approach — suddenly levying significant retrospective fines on our industry based on ill-defined rules — also fails the transparency and fairness test. All our engagement with both sides of the NSW Government and Revenue NSW so far has been based on this position.
“Aggregators are service providers facilitating relationships between independent mortgage and finance brokers and lenders. Aggregators pass on broker commissions from lenders to brokers. This is not a wage, nor is it a salary.
“We are urgently calling for a moratorium on any action against the mortgage and finance broking industry in NSW by Revenue NSW until there is clarity on the rules, and certainty for industry.”
Ms Pannek suggested that the industry had made it abundantly clear over many years that it would engage constructively with regulators and “even self-regulated when appropriate”.
“Our view is that the role of regulators is to provide clarity to community and businesses so that they operate effectively and with confidence. However, on this matter our view is that the goalposts keep moving,” she said.
“We have been engaging with industry, Revenue NSW and the NSW Government for some time because we are deeply concerned for our small business members and the financial stability of our industry.
“We now want all sides to commit to a moratorium until we have clarity on this issue.
“We are urgently seeking a commitment from both the Government and the Opposition to suspend all activities against the broking sector in NSW by Revenue NSW, by way of a moratorium, until there is certainty for industry. Then we can work with Revenue NSW on a constructive outcome.”
[Related: Aggregators under threat as Revenue NSW chases payroll tax]
JOIN THE DISCUSSION