Tax rule unfairly targets mortgage brokers and small businesses, says industry vet
The Mortgage and Finance Association of Australia (MFAA) has fired a missive at the NSW Government, urging the state to change the controversial Payroll Tax legislation that has caught the ire of Australia’s broking industry.
Despite partial wins in the Supreme Court, mortgage brokers and aggregators could find themselves subject to NSW’s payroll tax legislation, backdated for five years, which risks increasing their annual tax bills by thousands of dollars.
An inquiry into the issue was launched in November 2024. The MFAA under chief executive Anja Pannek (pictured) lodged its submission to the inquiry earlier this month.
Commenting on the now-published submission, Pannek: “We are deeply concerned that the long-term impact of this stealth tax will have devastating consequences for small broking businesses across NSW, and for borrowers who will see the cost of their mortgages increasing in the middle of a housing and cost-of-living crisis.
“After years of inconsistent interpretations in the law, it’s time for this legislation to be reviewed and corrected. NSW taxpayers deserve clarity, fairness, and a system that supports small business owners rather than penalising them for their productivity.”
Pannek stressed that mortgage brokers operate independent businesses that “serve their own clients, and maintain their own premises, supported by service providers such as aggregators”.
“They take on the risks and responsibilities of running a business, just like other small business owners. It’s difficult to understand why this broader context isn’t being considered fairly in the application of payroll tax,” she said.
The MFAA warned of “far-reaching and unintended consequences” of the payroll tax, not just for the broking industry but for other small business-driven industries that could find themselves in the firing line of Revenue NSW.
Pannek said: “As Payroll Tax laws are largely harmonised across Australia, this isn’t just an issue in NSW – this is a national issue. Hairdressers, dentists, tradies and any sole traders across the country could be targeted.
“These small businesses are the lifeblood of the Australian economy. We’re surprised this government would target small businesses and everyday homeowners for more tax.”
Customers will ultimately lose out if the NSW Government fails to address these issues, said Pannek, as it could lead to declining broker numbers and less competition.
“This law is outdated and unfit for purpose,” she said.
“We urge the NSW Government to amend the legislation immediately and call on the Federal Government to lead a national conversation on harmonising payroll tax laws. Australia’s small businesses deserve a fair, modern framework that reflects today’s economic realities.”
