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Date of judgement | 8 December 2014 |
Proceeding number | 1410076 |
Judge(s) | H Sorensen |
Court or Tribunal | NSW Civil and Administrative Tribunal |
Accident Compensation Act 1985 (Vic)
Administrative Decisions Tribunal Act 1997
Civil and Administrative Tribunal Act 2013
Pay-roll Tax (Amendment) Act 1983 (Vic)
ADMINISTRATIVE LAW - Civil and Administrative Tribunal Act 2013 (NSW) - Payroll Tax Act 2007 (NSW) – relevant contract - whether services supplied under a relevant contract may include professional services - when services not ordinarily required - whether services performed by a person who ordinarily performs services of that kind to the public generally in that financial year - whether genuine independent business - whether contractor must be financially independent of designated person - penalty -remission of market rate component - requirement to exercise reasonable
The Taxpayer, Levitch Design Associates Pty Ltd , sought review of the Chief Commissioner’s payroll tax assessments for the years ended 30 June 2008 to 2012 (“tax period”).The Taxpayer carries on a business designing and branding dental surgeries and healthcare centres. It engages architectural consultants, interior designers and graphic designers to provide services under contract. Mr Thom Wright is an architect, who during the tax period, provided ‘architectural services’ to the Taxpayer.
The Taxpayer was assessed for payroll tax on the basis that under s32(1) of the Payroll Tax Act 2007 (“the Act”) the arrangement between the Taxpayer and Mr Wright was a ‘relevant contract’, and the arrangement did not fall under any exception set out in s32(2) of the Act.
The Taxpayer and Mr Wright were party to an Independent Contractor Agreement (“agreement”). This agreement set out various terms regarding engagement, performance of work and payment of work. During the tax period Mr Wright provided services to other entities besides the Taxpayer. However, in proportion to Mr Wright’s total income during the tax years, the income received from the Taxpayer always exceeded 50% of that total. The year with the highest proportion of income received from the Taxpayer was the 2009 financial year which comprised of 93% of total income.
In light of the above conclusion, the Tribunal considered interest and penalty tax in relation to the 2009 financial year.
The Tribunal was not satisfied that the Taxpayer had demonstrated there were exceptional circumstances warranting a remission of market interest.
In relation to the penalty tax, the Tribunal concluded that the Taxpayer failed to demonstrate that it had taken reasonable care to comply with the Act or that the tax default occurred solely because of circumstances beyond its control.6