Referral fees in Australia: what small businesses need to know

Is it legal to pay a referral fee?

For most small businesses, yes. A painter can pay a builder for sending work, and a cleaner can pay a removalist for a booked end-of-lease job. Plenty of trades do this and plenty don't bother, and both are fine. The law mostly cares about two things: whether the person taking the fee has to tell their own customer about it, and whether the money goes behind someone's back.

So before you offer or accept a fee, check whether the other side works in a profession with its own disclosure rules, and make sure the money goes to the business with the owner's knowledge.

Never pay someone's staff on the side

This is the part that can turn a friendly arrangement into a crime. Queensland's Criminal Code makes it an offence to corruptly give an agent any benefit to influence how they handle their principal's business, and "agent" is defined to include an employee, a manager or a salesperson (sections 442A and 442BA). The maximum penalty for an individual is seven years in prison (section 442I). The Code also says that it being customary in your trade is no defence, and if the employer didn't agree to the payment it is up to you to prove it wasn't corrupt (section 442M).

In practice that means you pay the business, not the person. If a property manager at an agency sends you jobs, the fee goes to the agency on an invoice, and the principal knows about it. A $50 note slipped to the staff member who picks the tradie is exactly what these laws are aimed at. If you work outside Queensland, treat it the same way.

In NSW, the referrer has to tell the customer

NSW has a broader rule that reaches beyond the professions. Under section 47B of the Fair Trading Act 1987, a business that refers consumers to another supplier and gets a financial incentive for it has to take reasonable steps to make the consumer aware of the arrangement. The NSW Government's own example is a builder who recommends a tile supplier and is paid a flat fee for each client. The referrer doesn't have to say how much. They do have to say it before the customer signs, pays or commits, and the guidance says there are no exemptions.

If you pay a NSW business for referrals the duty is theirs, but mention it when you agree the fee. A partner who learns later that they should have been telling customers won't thank you for keeping quiet.

Real estate agents, property managers and strata managers

Property is where the rules are tightest, and they differ by state.

Queensland

Under section 157 of the Property Occupations Act 2014, an agent selling residential property must tell a prospective buyer about any relationship with a business they refer the buyer to for services connected with the sale. They must also say whether they get a benefit from that business, how much it is and the business's name. It has to be on the approved form (Form 8) and acknowledged by the buyer in writing before the contract is signed. The maximum fine is 200 penalty units. On the seller and landlord side, section 104 says an agent's appointment must state the source and estimated amount of any rebate, commission or benefit the agent may get on expenses they incur for the client. That covers an agent who books the pre-sale paint or a repair and is paid something by the tradie.

NSW

Section 47 of the Property and Stock Agents Act 2002 requires a seller's agent to disclose to the seller and to prospective buyers any relationship with, and any benefit from, a person they refer them to for professional services associated with the sale. A buyer's agent must disclose to the buyer. It goes on the Section 47 form at the time of the referral, and the form says the maximum penalty is $22,000. Section 57 also says a sales agency agreement must state the source and estimated amount of any rebates or commissions on expenses. If it doesn't, the agent isn't entitled to those expenses.

Strata and body corporate

The NSW Government says strata managing agents must disclose commissions to the owners corporation and can't accept gifts or benefits from other people beyond narrow exceptions, including one for gifts of $60 or less. In Queensland, the code of conduct for body corporate managers requires them to act in the body corporate's best interests and to take reasonable steps to get competitive prices. Either way, offering a strata or body corporate manager a fee for work you're paid from levies is a bad idea. Win the work on price and service instead. Our page on working with strata managers covers what they look for.

Financial advisers: the conflicted remuneration ban

Financial advisers and their licensees are banned from accepting conflicted remuneration under the Corporations Act. ASIC's guide (RG 246) describes it as any benefit that could reasonably be expected to influence the advice they give or the products they recommend (section 963A), and the ban on accepting it sits in sections 963E and 963G. This catches more than people expect. In 2025 the Federal Court ordered $925,000 in penalties against an adviser business and its licensee after the business took $135,863.65 in referral fees from a real estate agent for clients who set up self-managed super funds and bought property from that agent. If your partner gives financial advice, don't offer a fee and don't accept one from them.

Mortgage brokers and the credit rules

If you're the one being paid, for example a builder or an agent who sends buyers to a broker, the credit law matters. ASIC's guide RG 203 says a referrer can avoid needing a credit licence only if they stick to telling the customer that the broker can help and how to contact them. You must disclose any commission you may receive, in the same form as the contact details, so a written referral needs a written disclosure. If you pass the customer's details to the broker instead, you need a written referral agreement and the customer's consent, and you must pass the details on within five business days. You can't charge the customer a fee for doing it. Suggesting a particular loan from a particular lender takes you outside the exemption.

Lawyers

The Queensland Law Society points to rule 12.4 of the Australian Solicitors' Conduct Rules 2023. A solicitor who pays a referral fee must disclose it to the client, and one who receives a fee needs the client's informed consent. The QLS says the disclosure should be overt, not buried in fine print. If your partner is an accountant or another professional, ask them what their own code allows before you offer anything.

Tax and GST

A referral fee you receive is business income. The ATO lists commissions as assessable income and says you include them even when they arrive as goods, services or other benefits instead of cash, so a voucher or a free job counts too. A fee you pay to win work is generally a deductible business expense, because the tax law allows outgoings incurred in earning your income (section 8-1, the same rule the ATO applies to business gifts in TD 2016/14).

GST depends on the person you're paying. A business must register for GST once its turnover reaches $75,000, and a registered business charges GST on its referral fee like anything else it sells. Ask for a tax invoice so you can claim the GST credit. The seller has to provide one within 28 days if you ask, unless the sale is $82.50 or less including GST. If the referrer isn't registered, there's no GST in the fee.

One trap: if you pay a business that doesn't give you an ABN, you generally have to withhold 47% and send it to the ATO. The exceptions are narrow, such as a payment of $75 or less excluding GST, or a supplier who is genuinely doing it as a hobby and signs the ATO's statement.

Flat fee or percentage, and how to put it in writing

A flat fee per paid job is the easiest to run. Everyone knows the number and nobody argues when the job grows halfway through. A percentage suits work where job sizes vary a lot, such as a landscaper whose jobs run from a weekend tidy-up to a full yard, but it means showing the partner what you charged and agreeing what happens with variations.

Whichever you choose, write it down in a short email you both reply to. It should settle these points:

• What earns the fee: a lead, a quote, or a job the customer has paid for. Paid jobs are the fairest to you.
• The amount, and whether it includes GST.
• When you pay it, for example within 14 days of the customer paying you.
• Whether repeat work from the same customer earns a fee, and for how long.
• Who tells the customer about the fee, where the law requires it.
• That either of you can end it by email.

Hi Priya, just confirming what we talked about. For any customer you send us who goes ahead, we'll pay Bayside Property $100 plus GST per completed job, within 14 days of the customer paying us. It covers the first job only. We'll send the remittance with the customer's name on it. Either of us can stop this with an email. Thanks, Tom

The alternatives to paying

Many good partners would rather not be paid, and some can't be. The usual alternative is sending work back the other way, like a cleaner who hears a tenant needs a removalist. It costs nothing and builds the habit on both sides. The other is a proper thank-you, kept small and within the rules above, which our guide on keeping referrals coming goes into. Most partners keep sending work for a simpler reason, which is that you make them look good to their own customers. If you are still finding those partners, start with how to get referrals from other businesses.