Bonner v Chief Commissioner of State Revenue  NSWCATAD 231
The Applicants conducted a business of representing models to the Applicants’ clients, or sourcing models for clients, for a commission on each transaction between a client and a model.
The Applicants sought a review of payroll tax assessments for the 2014, 2015, 2016 and 2017 financial years and for the period 1 July 2017 to 30 November 2017 (collectively referred to as the Relevant Period).
The key issue was whether the Applicants were “employment agents” for the purpose of Div. 8 Pt. 3 of the Payroll Tax Act 2007 (NSW) (the “Act”).
A secondary issue was whether the agreements between the Applicants and the models were “relevant contracts” within the meaning of Div. 7 Pt. 3 of the Act.
Were the Applicants “employment agents” for the purposes of s. 37 of the Act?
The Chief Commissioner made the following submissions in support of the contention that the Applicants were employment agents:
- The modelling arrangements were "contracts", because a "contract" includes an "arrangement": s. 37(3).
- As part of (and therefore "under") the modelling arrangements, the Applicants "procured" (brought about by care or effort) the services of others (models). They did this by liaising between clients and models and negotiating the terms of the models’ engagements.
- The Applicants’ models worked in and for the conduct of their clients' businesses. Applying the factors in Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue  NSWSC 657: <
- The models worked on-site - that is, at the same workplaces as the Applicants’ clients. Those workplaces were the sets or locations used by the clients to create advertising or promotional material.
- Continuity or regularity of work was likely absent, as "[m]odels are engaged for specific jobs, and there is no expectation of return work from the same clients”. However, there was significant continuity or regularity of services: advertising agencies and production companies require modelling services on a day to day basis to create advertising and promotional material.
- The models worked under the clients' supervision and direction, with the Applicants and the models having essentially no creative input.
The Applicants argued against the proposition they were employment agents on the following grounds:
- The models work on a photo shoot that is not the site of the client, eg, a store in which clothes are sold may be the site. A photo shoot is an irregular and largely irrelevant location to the end user's business.
- There was no continuity of services. The models work ad hoc and on call: there is no expectation of future or further work.
- The models have creative input as they are the ones performing. The end users can be dissatisfied with the outcome (eg, where a model turned up intoxicated, late or otherwise not at all) but they cannot control the model's performance.
The Tribunal had regard to the Supreme Court decision in Bayton Cleaning and was not satisfied that the models, as service providers, are not effectively added to the workforce of the client for the conduct of the client’s business in circumstances where those models have agreed to provide services to the relevant client in accordance with agreements negotiated between the relevant model and the client and perform work in accordance with those agreements (at paras  & ).
Were the agency agreements between the Applicants and models “relevant contracts” for the purposes of s. 32 of the Act?
Having regard to the Tribunal’s decision regarding Issue 1 and applying s.32(3) which provides that an employment agency contract is not a relevant contract, the Tribunal found that there are no relevant contracts (at para ).
Following its findings in relation to Issues 1 and 2, the Tribunal determined that:
- the amounts paid by the Applicants to or in relation to models were taken to be wages under s. 40, (at para );
- another employment agent paid amounts of payroll tax so as to relieve the Applicants from payroll tax liability of those amounts under s. 41 (at para );
- the Applicants committed “tax defaults” for the purposes of s. 21 (interest) and s. 26 (penalty tax) of the Taxation Administration Act 1996 (NSW) (“TA Act”) in respect of the primary tax assessments (at para );
- prior to obtaining advice from 2 different accountants, the Applicants had not taken reasonable care; however part of the assessed penalty tax should be remitted under s. 27(3) of the TA Act from the dates on which the Applicants received (incorrect) advice from 2 accountants that no payroll tax was payable for payments made to the models (at para ); the Chief Commissioner was prepared to accept this as evidence that the Applicants took reasonable care to comply with the taxation law from those dates (at para );
- there were no exceptional circumstances that would require remission of the market rate component of interest under s. 25 of the TA Act (at para .
The Tribunal held that the Applicants did not satisfy their onus of proving the Assessments were incorrect other than in relation to the Tribunal’s finding that some tax had been paid by clients and the Chief Commissioner’s concession regarding reasonable care.