On 6 July 2022, the Court of Appeal of the New South Wales Supreme Court made an important decision in Chief Commissioner of State Revenue v E Group Security Pty Ltd [2022] NSWCA 115. The security industry commonly uses contractors to provide services to its clients. In the series of E Group Security cases, the courts considered whether payments to service providers met the definition of an “employment agency contract”, and therefore whether the taxpayer had a payroll tax liability. At first instance, Ward J focused on ss 38 to 40 of the Payroll Tax Act 2007 (NSW) which provided the statutory basis for employment agency contracts. Ward J focused on the UNSW Global test which looked at the “intended scope of the employment agency contract” to determine liability. On appeal, Bell CJ, Gleeson and Leeming JJA stated that there were “no compelling reasons to depart from the UNSW Global test”. The court suggested legislative change would be required to address the Chief Commissioner’s continued invitations to alter the meaning of the current legislation, as this would be applicable across all jurisdictions, not just in New South Wales.
The following article, about this case, was written by Amanda Guruge, CTA, Associate Lawyer, and Bruce Collins, CTA, Principal Solicitor, of Tax Controversy Partners and appeared in The Tax Institute’s Taxation In Australia, Vol. 57(5), commencing at p 279.
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[Tax Month – November 2022 – Previous Month, 10.11.22]