Payroll tax court decision summaries

NSW Supreme Court Decisions Summaries

Charitable Purposes

2016 Decision Summary

The National Institute of Dramatic Art v Chief Commissioner of State Revenue [2016] NSWSC 1471
Date of Decision: 17 October 2016

Order: White J ordered that the taxpayer's summons be dismissed, and prima facie, the taxpayer should pay the Chief Commissioner's costs.

Catchwords: TAXES AND DUTIES — Payroll tax — Exemption — Clause 12(1)(c) of Sch 2 of the Payroll Tax Act 2007 (NSW) — Whether plaintiff is a school or college within the meaning of cl 12(1)(c) — School-type activities the predominant and characteristic activity of the plaintiff — Wages paid or payable by the plaintiff not exempt wages

Case summary: The National Institute of Dramatic Art v Chief Commissioner of State Revenue [2016] NSWSC 1471

2015 Decision Summaries

Grain Growers Limited v Chief Commissioner of State Revenue (No 2) [2015] NSWSC 1445
Date of Decision: 30 September 2015

Order: The Chief Commissioner pay Grain Growers' costs of the proceedings as agreed or assessed.

Catchwords: PROCEDURE – where parties had mixed success – whether costs should follow the event - whether to award costs in accordance with the parties’ success of clearly separable and dominant issues

Case summary: Grain Growers Limited v Chief Commissioner of State Revenue (No 2) [2015] NSWSC 1445
Grain Growers Limited v Chief Commissioner of State Revenue [2015] NSWSC 925
Date of Decision: 14 July 2015

Order: The Court directed the parties to make further submissions as to the form of orders necessary to give effect to the Taxpayer's partial success, and as to any costs orders.

Catchwords: CHARITIES – charitable purposes – other purposes beneficial to public – where company provided services to the agricultural industry – where company’s purpose includes promotion of the interests of Australian grain growers – whether company has as its sole or dominant purpose a charitable purpose - TAXATION – payroll tax – exemptions – where taxpayer a non-profit organisation – whether taxpayer exempt from payroll tax on wages paid to its employees under s 48 of the Payroll Tax Act 2007 (NSW) - where taxpayer was involved in the promotion of the agriculture industry – where taxpayer acquired two companies engaged in commercial purposes related to the agriculture industry – whether employees of taxpayer in relation to those businesses undertake work ‘of a kind ordinarily performed’ in connection with the charitable purpose of the taxpayer under s 48(2) of the Payroll Tax Act 2007 (NSW)

Case summary: Grain Growers Limited v Chief Commissioner of State Revenue [2015] NSWSC 925

Employees/Independent Contractors

2016 Decision Summary

UNSW Global Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1852
Date of Decision: 21 December 2016

Orders:
  1. The assessment issued by the Chief Commissioner dated 7 May 2013 should be revoked.
     
  2. The Chief Commissioner should pay the Taxpayer's costs.
Catchwords: TAX — payroll tax — employment agents — Taxpayer provided the services of experts to provide expert services in connection with litigation or in relation to some aspect of a client‘s business — experts retained by the Taxpayer were independent contractors — whether payments made by the Taxpayer to experts were wages pursuant to s 3C(2)(C) of the Pay-roll Tax Act 1971 and s 40 of the Payroll Tax Act 2007 — held that services provided for a client’s benefit but not provided by a service provider working in a client’s business not intended to fall within the scope of the employment agency contract provisions — work done by the experts retained by the Taxpayer was not done in the conduct of a client’s business — payroll tax assessment notice set aside

Case summary: UNSW Global Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1852

2014 Decision Summaries

Newcastle Airport Pty Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1501
Date of Decision: 31 October 2014, 10 November 2014

Decision:The Court revoked the Chief Commissioner's assessments and ordered that the Chief Commissioner pay NAL's costs.

Catchwords: TAXATION AND REVENUE - assessment for payroll tax - where local councils delegated function of developing and maintaining airport to plaintiff - whether plaintiff's employment of employees or payment of employees' wages for purpose of operating airport were delegated functions or functions incidental thereto; powers, duties, rights and liabilities of trustees - trustee's right of exoneration - where plaintiff held moneys on trust for councils

Case summary: Newcastle Airport Pty Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1501
Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127
Date of Decision: 28 February 2014

Decision: The Court made the following orders:
  1. The notices of assessment issued to the plaintiff and dated 27 November 2009 be confirmed.
     
  2. The summons be dismissed.
Catchwords: TAXATION - Payroll tax - Payroll Tax Act 1971 – s 3A 0 s 3AA - s 3C - s 6 - s 7 - s 8 - Payroll Tax Act 2007 – s 6 - s 7 – s 31-36 - s 37-40 - Taxation Administration Act 1996 – s 9 - s 14 - s 17 - Employment agency contracts - Whether taxpayer procured the services of contractors for clients - Contracts and arrangements between taxpayer, contractors and clients - Whether contracts were employment agency contracts - Relevance of pre-contractual discussions and arrangements between contractors and clients - Whether "relevant contracts" provisions engaged - Whether request for refund required Chief Commissioner to make a reassessment

Case summary: Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127

Grouping Exclusions

2014 Decision Summary

Conrad Linings Pty Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1020
Date of Decision: 18 July 2014

Decision:
  1. The amended summons be dismissed.
     
  2. The assessment dated 2 December 2010 of the taxpayer of payroll tax, interest and penalty tax for the periods 1 July 2007 to 30 June 2008 and 1 July 2008 to 30 June 2009 be confirmed.
     
  3. The decision of the Chief Commissioner dated 12 December 2012 not to exclude the taxpayer from its group with Salex Interiors Pty Ltd for payroll tax purposes be confirmed.
     
  4. The taxpayer pay the Chief Commissioner's costs.
Catchwords: TAXATION AND REVENUE - assessment for payroll tax - where taxpayer is admittedly a group member with another company pursuant to s 72(2)(e) of the Payroll Tax Act 2007 and jointly and severally liable for payroll tax pursuant to s.81- whether the taxpayer should be excluded from group pursuant to s 79 of the Act

Case summary: Conrad Linings Pty Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1020

Superannuation

2015 Decision Summary

Qantas Airways Limited v Chief Commissioner of State Revenue [2015] NSWSC 826
Date of Decision: 30 June 2015

Order: The Court ordered as follows:
  1. The decision of the Chief Commissioner dated 29 July 2011, in so far as it refused the refund sought by the Plaintiff dated 17 November 2010, should be revoked.
     
  2. Qantas' application for an order that the refund sought by it by PricewaterhouseCoopers' letter of 17 November 2010 be allowed in full should be dismissed.
     
  3. Qantas is entitled to a refund of $2.3 million in addition to the refund allowed by the Chief Commissioner by his letter of 29 July 2011, and interest calculated in accordance with s.105 of the Taxation Administration Act.
     
  4. The matter is remitted to the Chief Commissioner to be determined in accordance with these reasons.
Catchwords: TAXES AND DUTIES – payroll tax – exemption from payroll tax of employer superannuation contributions paid “in respect of services performed by an employee before 1July 1996” under the Payroll Tax Act 2007 (NSW) Schedule 6, clause 4(1) and the Pay-Roll Tax Act 1971 (NSW) s 3AA(6A) – apportionment of contributions to a defined benefits scheme by reference to pre and post 1 July 1996 services – taxpayer paid contributions while the fund was in surplus – surplus was not used to reduce size of contributions – contributions paid at a higher “normal cost” level rather than an “adjusted normal cost“ level – whether contributions could be apportioned – whether CSR Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1380; (2006) 68 NSWLR 440 was correctly decided that top-up contributions could be apportioned notwithstanding the fund was not in deficit as at 30 June1996 – whether record-keeping requirements were met by the taxpayer where calculations of payments were not recorded contemporaneously with payments – held, allowing the appeal in part and remitting the matter to the Chief Commissioner: (1) CSR Ltd v Chief Commissioner of State Revenue was correctly decided; (2) the taxpayer was entitled to refunds in respect of top-up contributions and in respect of amounts paid in excess of the adjusted normal cost level; (3) the taxpayer did not prove that any part of the adjusted normal cost level contributions could be apportioned because a simple ratio of pre and post 1 July 1996 services could not be applied to these contributions

Case summary: Qantas Airways Limited v Chief Commissioner of State Revenue [2015] NSWSC 826

NSW Court of Appeal Decisions Summaries

Charitable Purposes

2016 Decision Summary

Grain Growers Limited v Chief Commissioner of State Revenue [2016] NSWCA 359
Date of Decision: 15 December 2016

Orders: The appeal is dismissed with costs.

Catchwords: TAXATION – payroll tax – charities – non-profit entity claiming exemption from payroll tax pursuant to s 48 of the Payroll Tax Act 2007 (NSW) – where charitable purpose the advancement of the grain industry – where employees engaged in information, technical and analytical services – whether employees engaged in work of a kind ordinarily performed in connection with the charitable purpose of the institution

STATUTORY INTERPRETATION – construction of s 48 of the Payroll Tax Act 2007 (NSW) – phrase “work of a kind ordinarily performed in connection with the … charitable … purposes of the institution” – whether s 48(2) requires assessment of work performed by comparable institutions – whether such a construction would produce absurdity – whether such a construction would preclude new or innovative charitable activities

STATUTORY INTERPRETATION – words used in legislation to be construed within their statutory context – utility of reference to the construction of particular words within a different statutory context

STATUTORY INTERPRETATION – legislative history – utility of legislative history where provisions substantially amended

Case summary: Grain Growers Limited v Chief Commissioner of State Revenue [2016] NSWCA 359

Employees/Independent Contractors

2014 Decision Summary

Smith's Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470
Date of Decision: 23 December 2013

Decision:
  1. Appeal allowed.
     
  2. Cross-appeal allowed in part as to Ground 1, but otherwise dismiss the cross-appeal.
     
  3. Set aside orders 1 and 2 made by Gzell J on 13 September 2012.
     
  4. In lieu of orders 1 and 2 referred to in Order 3, make the following orders:
     
    1. that each of the following Notices of Assessment issued by the respondent to the appellant be set aside:
       
      1. Notice of Assessment No 5654095 dated 12 January 2010 (the 2005 Assessment);
         
      2. Notice of Assessment No 5670903 dated 27 January 2010 (the 2006 Assessment);
         
      3. Notice of Assessment No 5653846 dated 12 January 2010 (the 2007 Assessment);
         
      4. Notice of Assessment No 5670885 dated 27 January 2010 (the 2008 Assessment);
         
      5. Notice of Assessment No 5670880 dated 27 January 2010 (the 2009 Assessment);
         
    2. that the respondent issue the appellant with a replacement Notice of Assessment for the relevant financial year in respect of each of the Notices of Assessment referred to in (a) above, as if the objection lodged by the appellant under s 86 of the Taxation Administration Act had been allowed in whole;
       
    3. the respondent pay the appellant's costs of the proceedings in the Equity Division, other than the costs of Mr Feil's report.
       
  5. The respondent pay the appellant's costs of the proceedings in the Court of Appeal.

    The Court of Appeal found that the GDAs are contracts under which the Taxpayer had supplied to it the services of persons for or in relation to the performance of work. However, the Court held that the GDAs are excluded from the definition of "relevant contract" because they covered services ancillary to the conveyance of goods by means of a vehicle provided by the contractors.

    The Court held that the owner-driver exclusions in the relevant sections of both Acts cannot apply to part of a "relevant contract", only to the contract as a whole. The focus of the exclusions is on an entire and indivisible “relevant contract”.

    The Court allowed the appeal and set aside the notices of assessment for the 2005 - 2009 years. Costs were awarded to the Taxpayer.
Catchwords: TAXES AND DUTIES – payroll tax – liability to taxation – Payroll Tax Act 2007 – Payroll Tax Act 1971 – contractor provisions – whether contractors engaged under a “Relevant contract” – whether appellant was supplied services ancillary to the conveyance of goods by means of a vehicle provided by the person conveying them – whether apportionment provisions of the Payroll Tax Act should apply

Case summary: Smith's Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470

Exemptions

2011 Decision Summary

Northern NSW Football Ltd v Chief Commissioner of State Revenue [2011] NSWCA 51
Date of Decision: 15 March 2011

Decision: The appeal was dismissed. The Court unanimously held that:
  1. The promotion of a healthy sport, such as soccer, although beneficial to the participants and the public is not a charitable purpose: Re Nottage [1895] 2 Ch 649 CA and The Royal National Agricultural and Industrial Association v Chester (1974) 48 ALJR 304 followed; and
     
  2. The promotion of a sport was not a benevolent purpose: Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) (1985) 1 NSWLR 567 applied.
Catchwords: Payroll Tax – exemption for a non-profit organisation having as its sole or dominant purpose a charitable purpose – whether a non-profit amateur sporting association such as the appellant having as its purpose the promotion and management of football in a particular geographic area falls within the exemption – consideration of the law of charities in the context of payroll tax

Taxation - payroll tax - exemption - non-profit organisation - whether dominant charitable purpose - promotion of soccer - not charitable purpose

Charity - promotion of sport - not charitable

Case summary: Northern NSW Football Ltd v Chief Commissioner of State Revenue [2011] NSWCA 51

Grouping Exclusions

2015 Decision Summary

Seovic Engineering Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCA 242
Date of Decision: 20 August 2015

Order:
  1. Dismiss the summons seeking leave to appeal; and
     
  2. Applicants pay the respondent’s costs of that summons.
Catchwords: TAX – payroll tax – Chief Commissioner’s de-grouping discretion under Payroll Tax Act 2007 (NSW), s 79 – whether Appeal Panel erred in law in concluding that precondition in s 79(2) not satisfied – whether precondition in s 79(2) satisfied when it is just and reasonable to exclude persons from a group in order to alleviate harsh consequences of grouping provisions – whether matters required to be considered when addressing that precondition include presence or absence of artificial arrangements to avoid duty; the splitting of existing business and other stratagems; and/or commercial arm’s length terms of dealings between members

Case summary: Seovic Engineering Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCA 242

High Court of Australia

Grouping

2011 Decision Summary

Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue [2011] HCA 41
Date of Decision: 05 October 2011

Decision: In 2009 the appellants in these proceedings succeeded in an appeal to the Supreme Court against certain payroll tax grouping decisions of the Chief Commissioner State Revenue. Gzell J upheld the appeal against the Chief Commissioner’s decisions to group the appellant for periods prior to 1 July 2003, and granted exclusions from grouping from 1 July 2003 to 30 June 2007.

In 2010 the Court of Appeal overturned the exclusion decisions of Gzell J on the basis that the decision to degroup was not open to the Court on the evidence before it. The Court of Appeal held that the only question that should have been decided was whether the Chief Commissioner’s failure to be satisfied that the appellants should be degrouped was based on an error of law. The Court of Appeal reinstated the assessments of the Chief Commissioner for the relevant years.

The High Court allowed the appeal on the basis that the Supreme Court had the same powers of review under section 101 of the Taxation Administration Act as the Administrative Decisions Tribunal, and had not erred by exercising the powers of the Chief Commissioner in granting exclusions. The High Court ordered that the matter be remitted to the Court of Appeal for further hearing in light of the determination by the High Court of the nature of the review.

Catchwords: Payroll tax – grouping and "de-grouping"

Administrative law – nature of appeal and nature of review – whether need to find error in discretionary decision of Chief Commissioner before review by Supreme Court

Original jurisdiction upon statutory "appeal" and "review" in respect of administrative decision – Nature, power and duties of court in exercise of that jurisdiction

Case summary: Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue [2011] HCA 41
Last updated: 22 August 2017