|Date of judgement||12 January 2017|
|Judge(s)||Roger Hamilton SC, Senior Member|
|Court or Tribunal||New South Wales Civil and Administrative Tribunal|
REVENUE LAW - payroll tax - exemptions - local councils - hostels - WORDS AND PHRASES - hostel
The case concerned an application for review of the Chief Commissioner of State Revenue’s (“Chief Commissioner”) decision that the Applicant, Snowy Monaro Regional Council (“the Council”), was liable to pay payroll tax on wages paid to staff at the Yallambee Lodge Aged Care Facility (“Yallambee Lodge”) from 1 July 2015, pursuant to s. 60(2)(d)(v) of the Payroll Tax Act 2007 (“the PTA”).
Yallambee Lodge, operated by the Council, was built in 1995 and initially provided basic services to aged persons. The facility presently operates as a specialised aged care facility that provides palliative care and assistance to its elderly residents. Yallambee Lodge has 40 beds in total, with 38 reserved for permanent residents and two reserved for respite care.
On 16 October 2015, the Chief Commissioner advised the Council that Yallambee Lodge constituted a ‘hostel’ within the meaning of s. 60(2)(d)(v) of the PTA (which had the effect that any wages paid by the Council in connection with Yallambee Lodge would not be considered as exempt wages).
On 11 December 2015, the Council lodged an objection to the Chief Commissioner’s decision. This was disallowed on 2 May 2016.
On 27 June 2016, an Application for Administrative Review was lodged by the Council in the NSW Civil and Administrative Tribunal.
The issue for determination by the Tribunal was whether Yallambee Lodge was a “hostel” within the meaning of s. 60(2)(d)(v) of the PTA. The term “hostel” is not defined in PTA.
Section 58 of the PTA relevantly provides:
Subject to section 60, wages are exempt wages if they are paid or payable by a council or county council, within the meaning of the Local Government Act 1993.
Section 60 of the PTA relevantly provides:
The Chief Commissioner referred to the Second Reading Speech for the Pay-roll Tax Bill 1971 and submitted that the term “hostel’” in s. 60(2)(d)(v) of the PTA should be interpreted broadly. This submission was made in reliance on the Second Reading Speech for the Pay-roll Tax Bill 1971 which refers to the rationale for s. 60 of the PTA as one of ensuring fairness between the private and public sectors in relation to payroll tax levied for non-business activities of Local government authorities. The Chief Commissioner submitted that Yallambee Lodge was operating commercially by competing against the private sector, and therefore consistent with the legislative purpose of s. 60, the wages paid by the Council should not be exempt from payroll tax.
Senior Member Hamilton considered the dictionary meaning of the term “hostel”, as well as the considerations of Ryan J in Australian Nursing Federation v Alcheringa Hostel Incorporated  FCA 375, and determined that the essential features of a “hostel” involve:
Senior Member Hamilton was not persuaded by the words of the Second Reading Speech to take a broad view of the meaning of the word “hostel”. Rather, the Tribunal found that it was much more likely that the legislature intended “hostel” to have its ordinary meaning. Senior member Hamilton also stated that the potential to compete with the private sector was not determinative of this definitional issue.
Senior Member Hamilton held that Yallambee Lodge did not satisfy the above criteria and therefore was not a “hostel” for the purposes of the PTA. The evidence supplied by the Council, which was accepted by the Tribunal, demonstrated that Yallambee Lodge was distinguishable from a hostel on the following basis:
The decision of the Chief Commissioner is revoked.