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Date of judgement | 10 August 2015 |
Proceeding number | 1410437 |
Judge(s) | Senior Member Isenberg |
Court or Tribunal | NSW Civil and Administrative Tribunal |
Payroll tax; grouping provisions; discretion to degroup members of a payroll tax group; importance of different factors
B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481
Boston Sales and Marketing Pty Limited v Chief Commissioner of State Revenue [2014] NSWCATAD 139
Chief Commissioner of State Revenue v Seovic Civil Engineering Pty Ltd [2014] NSWCATAP 94
Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd [2012] NSWCA 181
Conrad Linings Pty Limited v Chief Commissioner of State Revenue [2014] NSWSC 1020
Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42
Tasty Chicks Pty Ltd & Ors v Chief Commissioner of State Revenue [2009] NSWSC 1007
In these proceedings, the Taxpayer, Headwear Pty Ltd, sought review of the Chief Commissioner’s decision not to degroup the Taxpayer and three other employers (“the Headwear Group”) under s.79 of the Payroll Tax Act 2007 (“the Act”) in respect of the 2008 to 2011 tax years (“the Relevant Period”). The other employers are Duwan Pty Ltd as trustee for The Barblett Trust (“the WA Business”), 055 698 149 Pty Ltd as trustee of the Headwear Stockists Unit Trust (“the Victorian Business”), and the Taxpayer as trustee for a partnership trading under the name "Headwear Stockists (QLD)" (“the Queensland Business”).
The Headwear Group has been in the headwear (caps and hats) manufacturing industry since 1974, with a distribution network serving all continents of the world. It provides customised headwear for corporate, sporting, licensed and retail customers.
By letters dated 28 March 2011 and 12 December 2011, the advisers for the Taxpayer, Nexia Perth Pty Ltd (“the Advisers”) conceded that the Headwear Group constituted a group for payroll tax purposes. However, they requested that the Chief Commissioner exercise his discretion to exclude the Taxpayer from the group.
Section 79 of the Act enables the Chief Commissioner to exercise a discretion to exclude a member of a group if satisfied, “having regard to the nature and degree of ownership and control of the businesses, the nature of the businesses and any other matters the Chief Commissioner considers relevant, that a business carried on by the person, is carried on independently of, and is not connected with the carrying on of, a business carried on by any other member of that group.”
The issue for determination is whether the Tribunal, standing in the shoes of the Chief Commissioner, should exercise the discretion in s.79 of the Act to exclude the Taxpayer as a member of the Headwear Group.
The Tribunal had regard to the fact that Peter and Suzanne Barblett owned and controlled the WA business, Peter Barblett, R.B. Peterson and R.A. Brandsma controlled the board of the business entities in NSW, Victoria and Queensland, and trusts associated with these individuals and I.P. Crockett held 70% or more of the interests in the businesses in NSW, Victoria and Queensland.1
Financial statements from the Barblett Trust show that it received income, distribution and interest from businesses in the Headwear Group. Further, the Barblett Trust was the major equity owner in each of the NSW business, the Queensland business and the Victorian business. Mr Barblett was at all relevant times a director of the company carrying on each such business as well as being a director of the trustee of the Barblett Trust.2 Senior Member Isenberg concluded the Barblett Trust was engaged in the business of investing and deriving income from business in the Headwear Group not just the importation and distribution of headwear to WA.3
The Tribunal considered various matters presented in evidence, including:
In his submissions, Mr Diorio asserted that the Taxpayer’s business activities comprise a small percentage of that of the WA business. He also submitted that matters such as the involvement of Mr Barblett in compliance issues, form filling and the common web site were not material connections considering the judgement in Chief Commissioner of State Revenue v Seovic Civil Engineering Pty Ltd [2014] NSWCATAP 94 (“Seovic”) at [56].13
However, the Tribunal found that, while matters such as the businesses using the same external advisers, sharing the same postal address and the business operators having the same registered office may of themselves be inconsequential, in order to answer the statutory question it is necessary to consider those matters in conjunction with other potentially relevant matters including:
Those considerations taken together, led the Tribunal to conclude that the Taxpayer has not discharged its onus of satisfying, on the balance of probabilities, that for any tax year during the Relevant Period the business of the Taxpayer was carried on independently of and was not connected with the carrying on of each other group business.14
The decision under review was affirmed.
Headwear Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 166