In a decision handed down [on Wed 4.2.2015], the NSW Civil and Administrative Tribunal confirmed payroll tax assessments issued to a taxpayer for the period 1 July 2002 to 30 June 2007.
The Commissioner had grouped the taxpayer with 2 other companies for the purposes of s 16D(2) of the Pay-roll Tax Act 1971 (NSW) for the period 1 July 2002 to 30 June 2003 and s 106I(1) of the Taxation Administration Act 1996 (NSW) for the period 1 July 2003 to 30 June 2007. Both provisions deal with grouping of commonly controlled businesses.
The taxpayer argued it had not paid “taxable wages” for payroll tax purposes or carried on any business activity and therefore should not be grouped.
- The taxpayer had purchased land and constructed a warehouse on it for which it derived rental income from the 2 other companies.
- It was argued that merely holding a property and earning passive rental income did not constitute a business activity.
- In the alternative, it argued it should be excluded from the group.
The Tribunal found:
- the taxpayer was carrying on a business during the relevant period.
- It accepted the Commissioner’s contentions concerning the application of the relevant “controlling interest” tests and held the taxpayer was correctly grouped with the 2 other companies.
- It affirmed the taxpayer was jointly and severally liable with the other companies to pay the amount [of tax] owing.
- It also confirmed the Commissioner’s decision refusing to de-group the taxpayer for the relevant periods.
(Edgely Pty Ltd v Chief Comr of State Revenue [2015] NSWCATAD 16, NSW Civil and Administrative Tribunal, Verick SM, 4 February 2015.)
[LTN 22, 4/2/15]