|Date of judgement||12 September 2019|
|Judge(s)||McLeish, T Forrest and Emerton JJA|
|Court or Tribunal||Victorian Supreme Court of Appeal|
TAXATION AND REVENUE – Payroll tax – Contractor provisions
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503
Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 93 ALJR 807
Murdoch v The Commissioner of Pay-Roll Tax (1980) 143 CLR 629
Newcastle Club Ltd v Commissioner of Taxation (1994) 53 FCR 1
This matter concerned the application of the relevant contract provisions in the Payroll Tax Act 2007 (Victoria) and similar provisions in the Pay-roll Tax Act 1971 (Vic).
The initial proceedings were an appeal by The Optical Superstore Pty Ltd (TOSS) to the Victorian Civil and Administrative Tribunal (see The Optical Superstore Pty Ltd & Ors v Commissioner of State (Review and Regulation) (Corrected)  VCAT 169).
The Tribunal’s key findings were:
An appeal by the Victorian Commissioner to the Victorian Supreme Court against the finding that the payments by TOSS were not “wages” was dismissed (see Commissioner of State Revenue v The Optical Superstore Pty Ltd  VSC 524).
An appeal by the Victorian Commissioner to the Victorian Court of Appeal was upheld (see Commissioner of State Revenue v The Optical Superstore Pty Ltd  VSCA 197). The Court of Appeal determined that TOSS was liable for payroll tax on payments to Optometrist Entities from money that belonged to those entities.
The High Court refused an application by TOSS for leave to appeal to the High Court.
The relevant contracts provisions applied to the contracts between TOSS and the Optometrist Entities as follows:
TOSS engaged Optometrist Entities to perform services for its customers. The Optometrist Entities, in the course of their businesses, supplied the services of Optometrists to TOSS “for or in relation to the performance of work”.
The reference to “services for or in relation to the performance of work” is no more than a requirement that the services are work-related – see High Court decision in Accident Compensation Commission v Odco Pty Ltd (1990) 64 ALJR 606 at 612.
This was applied in the decision of the NSW Supreme Court in Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue  NSWSC 788 at . The Court found the services provided by financial planners for clients of Australian Financial Services Licensees, were work related.
TOSS was taken to be an employer under both paragraph (a) and paragraph (b) of s.33(1) because it supplied services of its staff to the Optometrist entities, and it was supplied with the services of persons (optometrists), for or in relation to the performance of work.
TOSS was taken to be the Employer under s.33(2) in relation to the Optometrists supplied by Optometrist Entities because TOSS was supplied with their services.
Note: each of the Optometrist Entities would also be taken to be an employer under s.33(1)(a) and (b), in relation to the administrative services provided by TOSS to the Optometrist Entities. This was not relevant in this case because there were no payments by the Optometrist Entities that might have been taken to be wages, but it demonstrates the breadth of the provisions.
The Optometrists engaged by the Optometrist Entities were taken to be employees under s.34(a) because they performed work for or in relation to which services were supplied to TOSS.
The Optical Superstore made payments to Optometrist Entities that were taken to be wages under s.35(1), because the payments were made “for or in relation to the performance of work” related to relevant contracts.
Note: The Optometrist Entities did not make payments to TOSS that might have constituted wages, but even if they had, the TOSS services were performed by multiple persons and therefore would satisfy the “2 or more persons” exemption.
The relevant contracts provisions in the NSW Payroll Tax Act 2007 are almost identical to the Victorian provisions considered by the Victorian Court of Appeal in this case.
Therefore, the principles endorsed by the Victorian Court of Appeal are applicable when determining the NSW payroll tax consequences of similar arrangements under which medical and technical contractors are engaged to perform work at NSW medical centres.
These principles are also relevant when considering the payroll tax implications of similar arrangements in other industries.
However, in each case the payroll tax outcome is determined having regard to the facts and circumstances of the case.