|Date of judgement||28 August 2019|
|Court or Tribunal||Supreme Court of New South Wales, Equity Division|
Payroll tax - employment agency contracts
Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue  NSWSC 657
Banfirn carried on business providing “formwork” on construction projects via contracts with head contractors. Banfirn entered into:
(i) Labour Hire and Sub-Contract Agreements and
(ii) Management Labour Agreements with both Linsari and Kalnosa.
The Chief Commissioner identified the Banfirn Pty Ltd’s contracts with Linsari Pty Ltd and Kalnosa Pty Ltd as “employment agency contracts” which attracted payroll tax pursuant to s. 37 of the Payroll Tax Act 2007 (“Payroll Tax Act 2007”), i.e. Linsari and Kalnosa were deemed “employment agents” who provided the services of third parties to their “client” Banfirn. Payments made by Linsari and Kalnosa to third party service providers were deemed wages which attracted payroll tax.
Banfirn challenged the assessment on the ground that neither Linsari nor Kalnosa were liable to pay payroll tax under s. 37 of the PTA because the contracts were not employment agency contracts; hence there is no liability to attach to Banfirn via the joint and several liability provision in s. 81(1) of the PTA.
Division 8 of Part 3 of the PTA imposes payroll tax on “employment agents” who provide the services of third parties to their “clients”: 
Section 37(1), within Part 3 of the PTA, defines “employment contract” for the purposes of the Act as meaning:
“a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent”.
The plaintiff submitted that each agreement between Banfirn and Linsari and Kalnosa concerned the provision and delivery of a “specific good” – i.e. formwork - and the provision of labour was “ancillary”, thereby taking the contracts outside of s. 37(1) of the PTA.
The Court held that each contract with Linsari and Kalnosa was an “employment agency contract” because:
Link to decision