Arrangements involving services are almost always relevant contracts. These contracts are taxable unless an exemption applies. There are 9 exemptions but you need to satisfy only one of them for your payment to be exempt from payroll tax.
If no exemption applies, you may still be able to claim a deduction for the non-labour component (goods or materials) of the payment, depending on what type of work is being performed. You should also deduct the GST component of the payment to the contractor. Otherwise, the full payment is taxable.