Payroll Tax Pain Extends to Mortgage Brokers!

Taxation & Revenue

minutes reading time

DATE PUBLISHED: April 16, 2024

key takeaways

  • The decision of Loan Market Group Pty ltd v Chief Commissioner of State Revenue [2024] NSWSC 390 was handed down on 12 April 2024. Justice Richmond held that a mortgage aggregator must pay payroll tax on commissions paid to mortgage brokers. 
  • The New South Wales Supreme Court has followed the same principles that found a medical practice was required to pay payroll tax on all amounts paid by the medical center to doctors.
  • This decision highlights the far-reaching provisions of the payroll tax legislation that extends beyond both a standard employee relationship and a standard contractor arrangement.
  • Any entity or person making a payment down to a person or entity, under a contractor, service arrangement or similar arrangement should be considering these arrangements, and the impacts payroll tax may have on their business.

The Facts

Similar to all mortgage broking businesses and aggregator relationships, Loan Market Group during the relevant years, were parties to an agreement with individual mortgage brokers, whereby they would provide relevant services to the broker.

The brokers would apply for loans with various lenders using the systems provided by Loan Market Group, when the lender approved the loans, the brokers would be entitled to commission. The commission was paid to a related company of Loan Market Group.

Once the lender paid the commission, the related company of Loan Market Group paid the amount of the commission to the broker less any fees owed to Loan Market Group under the relevant agreement between the parties.

This structure is fairly common when dealing with mortgage brokers and aggregators and as such the decision discussed below will have a wide impact on this industry and other industries in the future.

The Decision

Justice Richmond held that the business of Loan Market Group was entering into and performing the various “broker agreements”. That is, the business cannot be and was not characterised as being simply providing services to the brokers.

It was held that the broker agreements were a “relevant contract”. This is because a relevant contract requires that a designated person has provided services for or in relation to the performance of work.

The phrase “services” was interpreted widely and defined to include “act or helpful activity” or “helping or doing work for someone”. The mortgage brokers gave a suite of promises to Loan Market Group in how they would conduct their business (i.e., each mortgage brokers business). It was held the key promise was to conduct the business under the policies, branding and procedures mandated by Loan Market Group. Therefore, these services were caught under the relevant contract provisions, and a relevant contract existed.

It followed once the broker agreements were considered a relevant contract, the commissions paid under the agreement were considered taxable wages and payroll tax applied.

However, it was held that trailing commissions once the broker agreement was terminated are not taxable wages as there was no deemed employer and employee relationship.

It was further held that the “offering services to the public” exemption cannot apply as the services being supplied by the brokers to Loan Market Group were far more extensive than the services being supplied by the brokers to the public generally.

Helpfully, Justice Richmond found that at least in one instance work was performed by more than one person (being a data entry assistant), and that such work was integral to the work-related services performed by a mortgage broker, notwithstanding she was only paid $100 per week. This may assist in providing some reprieve where mortgage brokers engage other persons to provide other work integral to the work-related services.


The payroll tax pain being felt by various medical centres is not isolated, this latest Supreme Court decision confirms that mortgage aggregators do not escape the payroll tax provisions.

All industries in which money is paid down to a person via a contractor, service agreement or anything similar, should be reviewing their arrangements and considering the implications of payroll tax.

It is likely that there will be a raft of other payroll tax cases across the states, as the revenue offices attempt to further enlarge the reach of payroll tax into new areas. Reviewing and varying a structure and taking action early on may assist in mitigating any future pain that your agreements may cause.

how can mcw help?

Contact Kimberley Barnes from our Taxation and Private Advisory team if you wish to discuss your structure, have any payroll tax questions, find yourself involved in a payroll tax review and/or audit.


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