Go to top of page

Labour hire firms exposure draft TPB(I) D28/2015

Exposure draft
TPB Information Sheet TPB(I) D28/2015

Labour hire firms

This exposure draft is also available as a PDF – Download link at the end of this page

Introduction

Background

Tax agent service

Do labour hire firms need to register with the TPB?

Registering with the TPB

Appendix 1 – Examples of circumstances involving labour hire firms and whether they need to register with the TPB

Tax Practitioners Board exposure draft

The Tax Practitioners Board (TPB) has released this draft Information Sheet (TPB(I)) as an exposure draft and invites comments and submissions in relation to the information contained in it within 30 days. The closing date for submissions is 21 June 2015. The TPB will then consider any submissions before settling its position, undertaking any further consultation required and finalising the TPB(I).

Written submissions should be made via email at tpbsubmissions [at] tpb.gov.au or by mail to:

Tax Practitioners Board
GPO Box 1620
SYDNEY  NSW  2001

DISCLAIMER

This document is in draft form, and when finalised, will be intended as information only. While it seeks to provide practical assistance and explanation, it does not exhaust, prescribe or limit the scope of the TPB’s powers in the Tax Agent Services Act 2009 (TASA). The principles and examples in this draft TPB(I) do not constitute legal advice. They are also only at a preliminary stage. The TPB’s conclusions and views may change as a result of comments received or as other circumstances change.

Document history

This draft TPB(I) was issued on 22 May 2015 and is based on the TASA as at 1 April 2015.

Introduction

  1. This draft Information Sheet (TPB(I)) has been prepared by the Tax Practitioners Board (TPB) to assist labour hire firms to understand the operation of the tax agent services regime and whether or not they need to register with the TPB.
  2. For the purpose of this draft TPB(I), the term ‘labour hire firms’ takes a broad interpretation and includes firms that supply workers to another business or arrange workers to perform work or services directly for clients.
  3. Ultimately, whether a labour hire firm needs to register with the TPB is a question of fact. This means that each situation will need to be considered on a case-by-case basis having regard to the facts and circumstances of the labour hire firm.

Background

  1. The TPB administers a system for the registration of tax agents, BAS agents and tax (financial) advisers under the Tax Agent Services Act 2009 (TASA). Being subject to the TASA means that individuals and entities providing certain services for a fee or other reward are required to register with the TPB.
  2. An individual, partnership or company must be registered as a tax agent, BAS agent or tax (financial) adviser to provide a ‘tax agent service’, ‘BAS service’ or ‘tax (financial) advice service’ for a fee or other reward.
  3. It is important to note that the fee does not necessarily have to be separately charged to the client. It can form part of a package or bundle of services offered by a labour hire firm to their client.
  4. There are no separate or specific legislative provisions relating to whether labour hire firms need to be registered under the TASA.

Tax agent service

  1. A ‘tax agent service’ is any service that relates to:
    • ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a taxation law[1]; or
    • advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or
    • representing an entity in their dealings with the Commissioner; and

    that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:

    • to satisfy liabilities or obligations that arise, or could arise, under a taxation law [2]
    • to claim entitlements, that arise or could arise under a taxation law. 
  2. A tax agent service includes, but is not limited to:
    • preparing or lodging a return, notice, statement, application or other document about a taxpayer's liabilities, obligations or entitlements under a taxation law
    • giving a taxpayer advice about a taxation law that the taxpayer can reasonably be expected to rely upon to satisfy their taxation obligations, and/or
    • dealing with the Commissioner on behalf of a taxpayer.
  3. A BAS service is similarly defined, however is limited in scope to obligations, liabilities or entitlements that arise, or could arise, in relation to a BAS provision.[3] 
  4. A tax (financial) advice service is a tax agent service provided in the course of giving advice that is of a kind usually provided by an Australian financial services (AFS) licensee or a representative of an AFS licensee.[4] 

Do labour hire firms need to register with the TPB?

  1. Generally, the TPB considers that where a labour hire firm is merely sourcing a candidate for a client and the client is fully responsible for the employment or engagement of the candidate (including remuneration), then the labour hire firm does not need to register with the TPB. This is because the labour hire firm is providing a person rather than a tax agent service.
  2. On the other hand, if the labour hire firm is involved in placing a candidate with a client to provide tax agent services, and the labour hire firm is responsible for the remuneration of the candidate and also for ensuring that the client is satisfied with the services provided by the candidate, then the labour hire firm will most likely need to register with the TPB. In this case, the labour hire firm is considered to be providing a tax agent service rather than merely providing a person.
  3. As noted in paragraph 3 above, whether a labour hire firm needs to register with the TPB is a question of fact. This means that each situation will need to be considered on a case-by-case basis having regard to the facts and circumstances of the labour hire firm. This will usually involve an examination of the contracts and arrangements between the labour hire firm, client and candidate.
  4. Appendix 1 contains examples of circumstances involving labour hire firms and whether they need to register with the TPB.

Registering with the TPB

  1. If a labour hire firm wishes to become registered as a tax agent, BAS agent or tax (financial) adviser, they will need to meet certain legislative requirements, including a fit and proper person requirement and, in respect of individual applicants, qualification and experience requirements.
  2. For further information about the registration requirements refer to About registration

Appendix 1 – Examples of circumstances involving labour hire firms and whether they need to register with the TPB

No

 Particulars Consideration to labour hire firm

Who is responsible for the employment of the candidate? 

Who is responsible for the services provided by the candidate? 

 Who needs to be registered

1 Client engages labour hire firm labour hire firm to source a candidate

(permanent placement)

Labour hire firm is providing a person and not a service

Client pays labour hire firm a fee for sourcing the candidate (usually a percentage of the salary package of the candidate). Client is fully responsible for the employment or engagement of the candidate, including remuneration. Client Neither the labour hire firm nor the candidate, assuming the candidate is an employee of the client.

However, the client needs to be registered if they are providing tax agent services for a fee or other reward.

2 Client engages labour hire firm to provide a candidate

(temporary placement - client engages candidate)

Labour hire film is providing a person and not a service

Client pays labour hire firm a fee for providing the candidate (margin of the cost of employment). Client is fully responsible for the employment or engagement of the candidate, including remuneration. Labour hire firm is responsible for ensuring that the client is satisfied with the services provided by the candidate. Neither the labour hire firm nor the candidate is an employee of the client.

However, the client needs to be registered if they are providing tax agent services for a fee or other reward.

 
3
Client engages labour hire firm to provide a service

(temporary placement - labour hire firm engages candidate)

Labour hire firm is providing a service not a person

Client pays labour hire firm a fee for providing the candidate. This could include a set fee or hourly charge. Labour hire firm is responsible for the remuneration of the candidate. Labour hire firm is responsible for ensuring that the client is satisfied with the services provided by the candidate. Labour hire firm.

However, this will require an examination of the contracts and arrangements between the labour hire firm, candidate and client to determine if any other party is required to be registered.

 
4
Client engages labour hire firm to provide one of the its employees/contractors for a set period of time (e.g. three months)

(contract services)

Labour hire firm is providing a service not a person

Client pays labour hire firm a fee for providing the candidate (margin of the cost of employment). Labour hire firm is fully responsible for employment of the candidate, including remuneration. Labour hire firm is responsible for ensuring that the client is satisfied with the services provided by the candidate. Labour hire firm.

However, this will require an examination of the contracts and arrangements between the labour hire firm, candidate and client to determine if any other party is required to be registered.

[1] ‘Taxation law’ has the meaning as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997.
[2] See section 90-5 of the TASA.
[3] A ‘BAS provision’ is any one of the provisions defined as BAS provisions in section 995-1 of the Income Tax Assessment Act 1997.
[4] For more information on the meaning of ‘tax (financial) advice service’, see the TPB’s Information Sheet TPB(I) 20/2014 What is a tax (financial) advice service

Last modified: 19 May 2015