AFR: NSW Greens push for Big Four firms Deloitte, EY, KPMG and PwC 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.

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.


Big four ‘not a protected species’

“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,” said Greens NSW MP Abigail Boyd.

“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 big four accounting firms have the benefit of a professional liability scheme that can limit legal liability of the partnerships in certain circumstances.

The partnership structure means the big four firms are not required to lodge audited accounts with the corporate regulator and partner profits are treated as income distributions, which are currently not subject to payroll tax.

“It’s a very modest proposal, and then we’re not trying to expand it out to every partnership ... we’ve made it quite a limited ... and then we’d end up with an extra $50 to $60 million in the coffers to be able to spend on teachers,” Ms Boyd said.


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