A taxpayer has been successful before the NSW Civil and Administrative Tribunal in arguing that wages paid to its employees for services provided to non-profit organisations were exempt wages under the employment agency contract provisions under the Payroll Tax Act 2007 (NSW).
The Commissioner assessed the taxpayer to payroll tax for the years ended 30 June 2010 to 30 June 2012 and the period 1 July 2012 to 31 March 2013. The Commissioner argued the taxpayer was liable to payroll tax solely on its employer/employee relationship with its workers. The taxpayer objected to the assessments on the grounds that the wages were exempt wages under s 40(2) of the Act.
The taxpayer provided home-based care services under service agreements to its clients, which were non-profit organisations. The parties agreed the clients were payroll tax-exempt entities. They also agreed the clients had provided declarations to the taxpayer to the effect that if the wages of the taxpayer’s employees had been paid by the clients, such wages would be exempt. It was also common ground that the workers engaged by the taxpayer were in a common law employee/employer relationship and were paid wages by the taxpayer.
The issue was whether the taxpayer was liable to payroll tax on the wages it paid to the workers that performed services for its clients by reason of the common law employment relationship between the taxpayer and its workers, or the employment agency contract provisions applied regardless of the existence of the employer/employee common law relationship.
The Tribunal was of the view that Division 8 (the employment agency contract provisions) was a “self-contained regime” dealing exhaustively with “employment agency contracts” for payroll tax purposes. It was also of the view that the various agreements between the taxpayer and its clients were “employment agency contracts”. Further, it accepted that the agreements between the taxpayer and individual workers were arrangements to procure contract workers for the clients. Accordingly, it concluded the taxpayer should be taken to be an employer for Div 8 purposes and was entitled to the exemption under s 40(2).
(Health Service Pty Ltd v Chief Comr of State Revenue [2014] NSWCATAD 83, NSW Civil and Administrative Tribunal, Verick SM, 23 June 2014.)
[LTN 128, 7//14]