As part of payroll tax harmonisation efforts by the ACT government an additional $10 million will be collected in the 2014-15 financial year, with a further $30 million collected by 2018.

Contractors working on hourly rates and who are employed through agencies for ICT and government services will see an additional 6.85 per cent added to their tax liability as a result of the changes.

Agencies negotiate on behalf of contractors and provide professional insurance, salary packaging and other benefits including car leasing.

Treasurer Andrew Barr's budget forecast amendments to laws governing payroll taxes to bring the ACT into line with other jurisdictions, citing increased certainty for employment agents and contractors about tax liabilities.

Criteria for agencies acting as so-called "genuine employers" are unclear, according to the government, leading to tax legislation being difficult to interpret. The changes come into effect from July 1.

Giralang ICT contractor Rod Taylor said the changes were highly regressive and would unfairly hit entrepreneurs and start-up businesses, just as the federal government moves to cut public service jobs in the ACT.

He said most individuals hit by the changes would have already signed contracts for the coming financial year. “With only a couple of weeks' notice, there is no time to restructure or respond to these new arrangements,” Mr Taylor said.

“There is no time to renegotiate arrangements with the many parties involved such as agencies, payroll companies and employers.”

Mr Taylor said there had been no consultation before the change, which is certain to increase his tax bill by thousands.

"I would like to ask members of the ACT Assembly or the Treasurer himself if they'd like to take a 7 per cent pay cut," Mr Taylor said.

"Does the government want to promote the entrepreneurial spirit in Canberra? If they want us all to work for a conglomerate and multi-national companies, then go right ahead. But if you want people to show initiative and start businesses up themselves then you've got to support the small operator."

Another contractor who spoke to The Canberra Times estimated his bill would increase by more than $12,000 annually, forcing him to reconsider his work arrangements.

A spokesman for Mr Barr said conservative estimates suggested about 1000 contractors would be affected. "The government regularly look for instances of anomalies between other jurisdictions," the spokesman said.

"The ACT is the only place that has this exemption for contractors placed through employment agents. A number of ACT employment agents who operate in other jurisdictions have advised that implementing this exemption for the ACT only is difficult and have welcome this initiative."

He said the ACT Revenue Office had discussed payroll tax exemptions for employment agents with private agencies and the peak Information Technology Contract and Recruitment Association over the past year.

"Many in the industry had anticipated that at some point the government would move to close this tax concession and had put in place arrangements to manage the change."