Labour hire contractors have been scamming employers by not passing on payroll taxes to the Commissioner of State Revenue, the State Government warned yesterday.

Finance Minister Ben Wyatt yesterday warned employers who have contracted out their payroll processing to check that their taxes were being paid.

He said audits had found that some payroll processors, particularly those using ‘labour hire’ contracts, were not passing on payroll taxes despite receiving payments from employers.

“I urge all employers using a contracted payroll processor to confirm their relevant payroll tax is being paid to the Commissioner of State Revenue,” he said.

“Similarly, employers considering using an external party to pay employee wages, benefits, PAYG, superannuation and payroll tax should conduct appropriate due diligence before entering such an agreement.”

He said employers could contact the Department of Finance, Office of State Revenue to confirm their payroll tax had been paid.

Wyatt said the scam may not be restricted to WA.

“The Western Australian Government is collaborating with state revenue offices around the country to share intelligence and ensure a co-ordinated approach is taken to raise awareness about this scam,” he said

It’s not the first time scammers have targeted payrolls.

Former Australian Taxation Office deputy commissioner Michael Cranston was charged with two counts of abusing of public office counts after allegedly being involved in a scam targeting pay-as-you go tax last year.

Cranston’s son Adam was also charged in relation to the alleged $165 million tax fraud syndicate that used a payroll company Plutus Payroll to siphon off funds from the ATO.

CCI Workplace Consulting Manager Ryan Martin said employers needed to be aware of the risks when outsourcing to contractors.

► Want to keep up to-date with the latest business news and advice? Become a CCI Member today and get access to exclusive information designed to help you do business better. Find out more here.