Obtain Subcontractor's Statements before paying subcontractors (NSW)
NSW principal contractors obtain a signed Subcontractor's Statement for each payment period to avoid liability for a subcontractor's unpaid workers compensation premiums, payroll tax and wages.
Who must comply
Any business that contracts another person or entity to carry out work connected with its business undertaking, where the subcontractor's employees or workers perform the work. This includes building owners or occupiers who engage work in connection with their business, and subcontractors who in turn engage their own subcontractors.
What triggers it
Engaging a subcontractor who employs or engages workers to perform the contract work, and each payment claim made under that contract.
When due
Obtain a statement for each payment claim period. Each statement must state the period it covers, and sequential statements should give continuous coverage of the contract.
Evidence required
Signed Subcontractor's Statement for every period, showing the contract identifier and the date of the payment claim; attached certificate of currency for the subcontractor's workers compensation insurance; copies of statements obtained from sub-subcontractors; retention of statements for the periods set by each Act (currently up to seven years).
Max penalty
Without a valid statement the principal contractor may be liable for the subcontractor's unpaid workers compensation premiums, payroll tax and remuneration. A subcontractor, or a person signing on its behalf, who gives a statement knowing it to be false commits an offence under each of the three Acts
Who must comply with this? The applicability test by industry, business structure and size.
Summary
In New South Wales, a principal contractor can be made liable for a subcontractor's unpaid workers compensation premiums, payroll tax and employee remuneration for work done under the contract. Three laws create that exposure: section 175B of the Workers Compensation Act 1987, Schedule 2 Part 5 of the Payroll Tax Act 2007 and section 127 of the Industrial Relations Act 1996. The principal is relieved of it by obtaining a signed Subcontractor's Statement (Revenue NSW form OPT 011) declaring that, for the stated period, those premiums, remuneration and payroll tax have been paid, with the workers compensation certificate of currency attached. For payroll tax, Revenue NSW can recover a contractor's unpaid tax from the principal where it relates to the contract work, remains unpaid 60 days after the financial year ends, and no signed statement was obtained.
Enforced by
Industries
Topics
Related
- NSWComply with NSW Design and Building Practitioners Act 2020Designers + builders of Class 2-9 buildings in NSW must register + lodge declarations.
- NSWHome Building Compensation Fund (NSW)NSW residential building work >$20,000 requires HBCF insurance.
- CWLTHPrepare a safe work method statement (SWMS) for high risk construction workBefore high risk construction work starts, a SWMS must identify the work, its hazards and risks, the control measures, and how they are implemented, monitored and reviewed.
- VICMaintain VBA registration as builder / draftsperson / surveyorVIC building practitioners must hold current registration + appropriate insurance.
- QLDHold current QBCC licence for QLD building workQLD building work > $3,300 requires QBCC licensing + minimum financial requirements.
- CWLTHHold a Construction Induction (White Card) before construction site workAll construction site workers must have completed nationally recognised induction training (CPCWHS1001).
Frequently asked questions
- Who must comply with Subcontractor's Statements before paying subcontractors (NSW)?
- Any business that contracts another person or entity to carry out work connected with its business undertaking, where the subcontractor's employees or workers perform the work. This includes building owners or occupiers who engage work in connection with their business, and subcontractors who in turn engage their own subcontractors.
- What triggers Subcontractor's Statements before paying subcontractors (NSW)?
- Engaging a subcontractor who employs or engages workers to perform the contract work, and each payment claim made under that contract.
- When is Subcontractor's Statements before paying subcontractors (NSW) due?
- Obtain a statement for each payment claim period. Each statement must state the period it covers, and sequential statements should give continuous coverage of the contract.
- What is the maximum penalty for Subcontractor's Statements before paying subcontractors (NSW)?
- Without a valid statement the principal contractor may be liable for the subcontractor's unpaid workers compensation premiums, payroll tax and remuneration. A subcontractor, or a person signing on its behalf, who gives a statement knowing it to be false commits an offence under each of the three Acts
- What evidence is required for Subcontractor's Statements before paying subcontractors (NSW)?
- Signed Subcontractor's Statement for every period, showing the contract identifier and the date of the payment claim; attached certificate of currency for the subcontractor's workers compensation insurance; copies of statements obtained from sub-subcontractors; retention of statements for the periods set by each Act (currently up to seven years).
Source: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax/taxable-wages/contractors. Rules Mate is not a law firm. Always verify against the live regulator source before acting.