On Friday 13.5.2016, the NSW Civil and Administrative Tribunal affirmed a decision of the NSW Commissioner, refusing to exclude a taxpayer from a payroll tax group, pursuant to s 79 of the Payroll Tax Act 2007 (NSW).

In August 2014, the Commissioner issued payroll tax assessment notices to the taxpayer in respect of the period 17 April 2012 to 30 June 2014. The assessments were issued on the basis that the taxpayer was, for payroll tax purposes, grouped with another entity. The taxpayer objected to the assessments on the basis that it was not actually part of any ‘group’ or that if was, the Commissioner ought to have exercised the power he has under s79 to exclude it from the group. The objection was disallowed. The taxpayer then sought review of the disallowance decision. At the commencement of the proceedings, the taxpayer conceded that it did form a group with the other entity but the review went on based on the s79 exclusion point.

The Tribunal was not satisfied that the taxpayer ought be excluded from the group under s79 because the business was not carried on by the taxpayer was carried on independently of the business carried on by the other member of the group. Nor was it satisfied that there was no relevant connection between the carrying on of those businesses throughout each year of the relevant period. Accordingly, the Commissioner’s decision was affirmed.

(Namoi Tyreright Pty Ltd v Chief Comr of State Revenue [2016] NSWCATAD 88, NSW Civil and Administrative Tribunal, Isenberg SM, 13 May 2016.)

[LTN 91, 13/5/16]

Extract from the Tribunal’s decision

  1. In October 2013 a representative of Tyres4U Pty Ltd ATF the TWA Trust (Tyres4U) wrote to the Respondent (sometimes referred to in this decision as the Chief Commissioner) stating that Tyres4U was prima facie grouped with the Applicant and another entity pursuant to s 72 of the Payroll Tax Act 2007(the Act). Tyres4U applied for the exclusion of Tyres4U, the Applicant and the other entity from the group pursuant to s 79 of the Act.
  2. The response, if any, of the Chief Commissioner to Tyres4U was not brought to the attention of the Tribunal in these proceedings.
  3. However, on 27 August 2014 the Respondent issued Payroll Tax Assessment Notices (the Assessments) to the Applicant pursuant to the Act in respect of the period 17 April 2012 to 30 June 2014 (the Relevant Period). The Assessments were issued in respect of payroll tax and interest on the basis that the Applicant was, for payroll tax purposes, grouped with Tyres4U.
  4. The Applicant objected to the Assessments on the grounds that the Applicant was entitled to, but did not receive, the benefit of a threshold amount for each tax period during the Relevant Period, that the Applicant was not a member of a group for payroll tax purposes at any time during the Relevant Period, and that if the Applicant was a member of a relevant group then the Chief Commissioner should have exercised the discretion available to him pursuant to s 79 of the Act to exclude the Applicant from the relevant group (the Objection).
  5. The Objection was disallowed and the disallowance notified to the solicitors for the Applicant by letter dated 21 November 2014 (the Disallowance Decision). By application filed with the Tribunal on 23 January 2015 (the Application) the Applicant sought a review of the Disallowance Decision.
  6. At the commencement of the first day of the hearing counsel for the Applicant informed the Tribunal that the Applicant conceded that it did form a group with Tyres4U for payroll tax purposes for the Relevant Period.

Section 79 of the Payroll Tax Act 2007 (NSW)

79 Exclusion of persons from groups
(1) The Chief Commissioner may, by order in writing, determine that a person who would, but for the determination, be a member of a group is not a member of the group.
(2) The Chief Commissioner may only make such a determination if satisfied, having regard to the nature and degree of ownership and control of the businesses, the nature of the businesses and any other matters the Chief Commissioner considers relevant, that a business carried on by the person, is carried on independently of, and is not connected with the carrying on of, a business carried on by any other member of that group.

(5) A determination can be expressed to take effect on a date that is earlier than the date of the determination.