It called the subcontracted work specialised. The Chief Commissioner called it payroll tax. The Court agreed, on every issue.
A commercial cleaning company pays $30 million to subcontractors over five years. It calls the work “specialised.” The Chief Commissioner calls it payroll tax [4].
The Supreme Court agreed. On every issue. SoClean Pty Ltd v Chief Commissioner of State Revenue [2026] NSWSC 161 (Hmelnitsky J). The decision has been appealed, with the hearing listed for June.
The facts
SoClean cleaned 59 shopping centres across Sydney [2]. Its employees handled day-to-day work. For floor stripping, pressure cleaning, carpet shampooing and high cleaning above two metres, it engaged subcontractors [3] and treated those payments as outside the payroll tax net.
The Chief Commissioner assessed the payments as deemed wages under the employment agency provisions in Part 3, Division 8 of the Payroll Tax Act 2007 (NSW) [5]. Assessments covered FY2019 to FY2023, with 25% penalty tax and market rate interest [11].
Where SoClean lost
The “which contracts” issue. SoClean argued specialised services fell outside its written client contracts [80]-[84]. Rejected. Section 37 defines “contract” to include agreements, arrangements and undertakings, formal or informal, express or implied [85]. The services were procured to meet standards in the client contracts [90].
The “in and for” issue. SoClean argued the work was not “in and for” its clients’ businesses. The Court found the opposite [95]. Done on-site, with regularity, subject to client direction [93]. Deep cleaning toilets and stripping floors bore the same relationship to the business as daily mopping [100], [106].
Section 39. SoClean argued that unless the Commissioner could identify specific workers, the deeming provisions could not apply [70]-[72]. The Court held s 39 is not a precondition to liability [75]. If SoClean’s own evidence could not identify the workers, that was reason to dismiss its case, not uphold it [76].
Revenue Ruling PTA 027. SoClean argued the Commissioner should have assessed the agent “closest to the ultimate client” [130]. The Court found SoClean was that agent [135]. It never followed the Ruling’s procedure [134].
Penalty and interest. 25% penalty upheld, reasonable care not established [143]-[145]. Market rate interest confirmed: remitting would reward late payment of a correctly assessed liability [148]-[149].
Why this matters
This is the second major payroll tax decision on commercial cleaning in NSW, after SKG [94]. Same judge. Same result. Cleaning businesses separating “day-to-day” from “specialised” work and treating subcontractor payments as outside the payroll tax net should review their position.
The employment agency provisions are integrity measures with broad reach [85]. The label does not matter. What matters is whether the work is done in and for the client’s business [127].
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.