NSW Greens push for big four firms to pay tax on partner profits
The NSW Greens have proposed an amendment to force accounting firms structured as partnerships with more than 100 partners to pay 5.45 per cent payroll tax on their partner income.
NSW Greens MP Abigail Boyd has proposed that the big four accounting firms pay payroll tax on partner profit distributions. Getty
The move – aimed at the big four accounting firms Deloitte, EY, KPMG and PwC – would be an Australian first and deliver more than $50 million in extra tax to NSW, according to Greens modelling.
The amendment to the state Payroll Tax Act 2007 would define as “wages” the “amount paid or payable, as profit distribution, to a partner of any Australian accounting partnership” which is “covered by a professional liability scheme” and has more than 100 partners. It would only cover partner profit distributions made in NSW.
The change, part of the forthcoming Revenue, Fines and Other Legislation Amendment Bill 2023, is due to be voted on in NSW parliament on Thursday.
As partnerships, the big four distribute profits to partners without having to pay payroll tax. Partners, who can elect to split their income using vehicles such as service trusts, then pay any applicable income tax directly to the ATO. The firms already pay payroll tax on the salaries of staff members.
“Senior executives and CEOs at all major listed companies are already covered by payroll tax, as are other major consulting firms like McKinsey and Accenture,” Greens NSW MP Abigail Boyd said.
“It’s time for the big four accounting firms to stop being treated as a protected species and stop taking the taxpayers of NSW for a ride.”
Partners within a partnership legal structure typically have unlimited personal liability for losses. However, the partners at the
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