State Revenue Office Victoria Payroll Tax Audit Objection

The situation

Priya, 39, runs a medical practice group in Melbourne with 8 specialist doctors contracted as independent contractors. SRO VIC conducted an audit of her payroll tax returns for the 2022–2025 period and issued a Payroll Tax Assessment of AU$68,000 + penalty AU$13,600 + interest = AU$84,200 total, declaring that her contracted doctors' fees are "wages" subject to Victorian payroll tax.

The assessment is based on SRO VIC's interpretation that her contractor arrangements don't qualify for any of VIC's three contractor exemptions under ss.31–37 Payroll Tax Act 2007. But Priya believes her doctors are genuinely independent contractors who also consult at other practices and have their own professional service companies (the "services available to the public" exemption).

Priya has 60 days to lodge a formal objection. She contacts a payroll tax specialist who quotes AU$6,500 to draft the objection. She asks if she can do it herself and the specialist says yes in principle, but she needs to correctly apply each exemption test to each contractor's specific arrangement.

(a) The three VIC contractor exemption tests matter. The tool walks through each contractor's arrangements against s.32 (services contract, public + premises/equipment/subcontract), s.33 (results contract, paid by results not time), and s.37 (80% income rule exception). Most medical practice arrangements fail s.37 (doctor derives >80% from the one practice) but may pass s.32 (doctor has own ABN, own professional indemnity, consults at other practices, has professional service company).

(b) The NSW payroll tax medical practice ruling is relevant but VIC follows its own case law. VIC's contractor provisions closely mirror NSW's but VIC has had its own VCAT decisions on medical practice contractor arrangements. The objection must reference VIC statutory provisions, not NSW equivalents.

Who receives this

Victorian employers receiving SRO VIC payroll tax assessments, particularly medical practices (specialist doctors), professional service firms (IT consultants, marketing agencies), construction businesses (labour hire and subcontractor arrangements), and hospitality businesses (contractor chefs, casual labor). Primary segment: businesses with AU$50,000–$500,000 in contested payroll tax assessments who cannot justify AU$6,000+ in specialist fees for objection drafting.

Why the agency will not advise you

SRO VIC cannot advise employers on how to contest its own payroll tax assessments. PTX Express handles compliance (lodging returns), not audit objection drafting. Specialist advisors charge AU$3,000–$8,000 for objection preparation. The three VIC contractor exemption tests are published statutory provisions (ss.31–37, Payroll Tax Act 2007) that can be structured into a questionnaire and applied to specific contractor arrangements.

Key facts, with sources

• The State Revenue Office Victoria administers payroll tax under the Payroll Tax Act 2007 (VIC). SRO VIC's 2025-26 compliance focus explicitly includes undisclosed wages with emphasis on superannuation, fringe benefits, and contractor payments. When SRO VIC issues a Payroll Tax Assessment after an audit, the employer has 60 days to lodge a formal objection under the Taxation Administration Act 1997 (VIC). The objection is reviewed by an independent officer. If disallowed, the employer can appeal to VCAT. Source: Compliance areas of focus 2025-26 — State Revenue Office Victoria · Lodge an objection — State Revenue Office Victoria
• PTX Express is SRO VIC's online portal allowing employers to calculate, lodge monthly payroll tax returns, and manage their payroll tax account. PTX Express is a compliance tool, it does not provide audit objection drafting, penalty remission analysis, or contractor exemption analysis. No self-serve SRO VIC payroll tax audit objection tool was found in two searches. Source: PTX Express — State Revenue Office Victoria · Self-service options — State Revenue Office Victoria

When to bring in a professional

Self-serve responses fit routine cases: clear facts, amounts a business can absorb, and a deadline still ahead of you. Bring in a licensed professional when the amount at stake is large relative to their fee, the facts are genuinely disputed, criminal exposure is possible, or the deadline has already passed. A short paid consultation to sanity-check your plan is often worth it even when you handle the filing yourself.

All sources for this guide

1. Compliance areas of focus 2025-26 — State Revenue Office Victoria
2. Lodge an objection — State Revenue Office Victoria
3. PTX Express — State Revenue Office Victoria
4. Self-service options — State Revenue Office Victoria