Background
The Appellant operated three medical centres. In each, doctors were engaged through written agreements to treat patients at those centres. The agreements provided for the respective doctors to use the centres as private practitioners and for the Appellant to provide the doctors with rooms and shared administrative and support services. Pursuant to the written agreements, 30% of the Medicare benefits payable to each doctor in respect of the patients seen at the medical centres was to be paid to the Appellant.
The Appellant and all except 3 of the doctors had an arrangement outside of the agreements, where each doctor opted to direct Medicare to pay all benefits paid in respect of the doctor’s patients into a bank account held in the name of the Appellant. Administrative staff employed by the Appellant would record and reconcile all Medicare benefits received for the doctor and would then pay 70% of those amounts to the doctor, with the remaining 30% retained by the Appellant, representing the payment to be made to it by the doctor under the agreement.
The Chief Commissioner levied payroll tax under the Payroll Tax Act 2007 (“the Act”) on these payments on the basis that the agreements were “relevant contracts” and that the payments to the doctors were made “for or in relation to the performance of work relating to a relevant contract”.
The Statutory Framework
The Act imposes payroll tax on wages, including payments deemed to be wages. Under Division 7 of the Act, wages include amounts paid or payable “for or in relation to the performance of work relating to a relevant contract” and deemed to be wages under s.35 of the Act. A relevant contract is defined in s.32 of the Act.
Primary Decision
At first instance, the Tribunal confirmed the Assessments. The Tribunal found that the agreements between the Appellant and the doctors were “relevant contracts” as the agreements secured the provision of the services of the doctors to the patients of the Appellant’s medical centres, those services were work-related and none of the exemptions to the relevant contract provisions applied.
The Tribunal found that the payments made to the doctors were deemed wages under s. 35 of the Act, as the payments were made for or in relation to the performance of work relating to a relevant contract. The Tribunal determined that there was a clear relationship between the services and the relevant contract as the services involved the performance of work and these were the very subject of the agreements, and a clear indirect relationship between the performance of work and the payment made to the doctors, as required by s. 35 of the Act.
The Appellant’s Submissions
The Appellant raised seven grounds of appeal during the appeal, which were particularised in an Amended Notice of Appeal filed following the hearing. In substance, these grounds contended that the Tribunal at first instance erred in construing and applying ss. 32 and 35 of the
Act in determining whether the amounts paid to the doctors were deemed wages. In doing so, the Appellant challenged a factual finding of the Tribunal, being that the doctors provided services to the Appellant. It asserted that no services were provided to the Appellant, and instead that the doctors provided services to patients and the Appellant provided services to the doctors.
By grounds 1, 2 and 3, the Appellant contended that the Tribunal erred in construing and applying s. 35(1), by concluding that the agreements were relevant contracts.
During the hearing, the Appellant sought leave to raise a new argument on appeal, which became ground 4. By this ground, the Appellant asserted that the exemption to the relevant contract provisions in s. 32(2)(b)(i) applied.
This would require that the doctors’ services were not ordinarily required by the Appellant, and that the doctors ordinarily provided services to the public generally.
By grounds 5 and 6, the Appellant asserted that the Tribunal erred in law in finding that there was a clear relationship between the provision of services and the payments made by the Appellant to the doctors and the conclusion that these payments are deemed wages, because the doctors did not in fact provide services to the Appellant, and only provided services to patients. <
By ground 7, the Appellant submitted that the Tribunal made a legal error by failing to follow or, as a matter of comity, apply Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 145 (“Homefront Nursing”), which considered a similar factual scenario.
The Chief Commissioner’s submissions
The Chief Commissioner submitted that the appeal did not raise any questions of law, and the Appellant had not sought leave to raise other grounds as required by s.80 of the Civil and Administrative Tribunal Act 2013 and the conclusion of the Tribunal at first instance should be upheld.
Decision
The Appeal Panel refused leave for the Appellant to raise a new argument on appeal, being the argument contained in ground 4, and dismissed the appeal.
The Appeal Panel commented that the Appellant impermissibly asserted that the Tribunal erred in its construction and application of certain provisions of the Act without also identifying how those errors purportedly occurred (at [59]).
In respect of the grounds advanced by the Appellant, the Appeal Panel reached the following conclusions:
- grounds 1, 2 and 3 were rejected by the Appeal Panel on the basis that no question of law was raised and these grounds merely disputed the Tribunal’s findings of fact (at [68]);
- leave was refused to rely on the argument contained in ground 4, as the Appellant had the opportunity to run that argument at first instance but chose not to, and made no submissions about the basis upon which the Appeal Panel should exercise its discretion to allow the argument to be raised on appeal (at [75] and [77]); In any event, the Tribunal found that s 32(2)(b)(i) did not apply and no challenge was brought on this appeal against that conclusion of fact (at [76]).
- grounds 5 and 6 were rejected as they did not involve a question of law and instead sought to dispute the Tribunal’s finding of fact that the doctors provided services to the Appellant under the agreements (at [91]); and
- ground 7 was rejected, as the Appeal Panel held that it is a settled principle that the Tribunal is not bound by precedent and is only ordinarily required to follow decisions of the Appeal Panel and decisions of the Tribunal at first instance as constituted by the President or a Deputy President (see [97]-[99]). In addition, the decision in Homefront Nursing was reached before, and therefore without the benefit of the Victorian Court of Appeal decision of Commissioner of State Revenue v The Optical Superstore [2019] VSCA 197, which clarified the relationship required by s. 35 of the Act.
Orders
(1) Leave to raise new argument on appeal refused.
(2) Appeal dismissed.
Link to decision
https://www.caselaw.nsw.gov.au/decision/181cc8da2e1d44df5f04d469
