|Date of judgement||5 October 2011|
|Proceeding number||S218 of 2011|
|Court or Tribunal||High Court of Australia|
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
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.
The Chief Commissioner issued payroll tax assessments for the years ended 30 June 2002 to 30 June 2007 based upon the grouping of M & J Souris, Tasty Chicks Pty Limited, Angelo Transport Pty Limited, Souris Holdings Pty Ltd (the appellants) and two other companies. Tasty Chicks and Angelo Transport sought to be excluded from the group by invoking the Chief Commissioner's discretion.
Proceedings were commenced in the Supreme Court by the taxpayers under s.97 of the Taxation Administration Act 1996 ("TAA"). There were three legislative periods in question:
Gzell J held as follows:
However, on appeal by the Chief Commissioner to the Court of Appeal, it was held that:
In respect of all three legislative periods, the Court remarked that the real question was whether the Chief Commissioner's failure to be satisfied of the substantial independence was vitiated by errors of law, as referred to by Dixon J in Avon Downs.
The High Court of Australia allowed the appeal by the taxpayers and set aside the order of the Court of Appeal.
In construing the nature of a review under s.97 of the TAA, the Court considered it significant that:
The Court considered that the circumstances in Avon Downs could be distinguished from the present case because the taxpayer there had utilised its statutory right to request that the Commissioner treat its objection as an appeal and forward it to the High Court, and upon that appeal the taxpayer was limited to the grounds stated in the objection. This was to be contrasted with the other avenue available to the taxpayer which was a review by the Board of Review which had all the powers and functions of the Commissioner and its decisions upon a review were deemed to be assessments, determinations or decisions of the Commissioner. The Court agreed with Gzell J's observation that "the powers in the [TAA], s.101 are quite different from the powers of a court on appeal under the Income Tax Assessment Act 1936 (Cth) ( HCA 41 at  and )."
The Court held that the powers on review are the same for the Supreme Court and the Administrative Decisions Tribunal, thereby agreeing with Gzell J. However, that conclusion is subject to the supplementation of the Supreme Court's powers by s.75A of the Supreme Court Act ( HCA 41 at ).
Finally, the Court held that the Court of Appeal erred in its conclusion that the taxpayers were required to show that the Chief Commissioner had erred on the materials before him and to show that the exercise of a discretion by the Chief Commissioner was vitiated by error of law as referred to in Avon Downs ( HCA 41 at ).
The 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 review. This is because a hearing on the merits of the grouping and de-grouping decisions was not within the scope of the grant of leave.