The NSW Supreme Court has held that payroll tax assessments issued to Newcastle Airport Ltd (NAL) should be revoked.
The Chief Commissioner of State Revenue had issued payroll tax assessments to NAL totalling just over $622,000. NAL argued that the wages in respect of which payroll tax was assessed were not taxable wages, but were exempt wages pursuant to s 58 of the Payroll Tax Act 2007 (NSW). That section essentially provides that wages are exempt wages if they are paid or payable by a council or county council.
The Court said NAL is not a local council, but manages the civil aviation facility at the Newcastle Airport at Williamtown on behalf of the Newcastle City Council and the Port Stephens Shire Council. For that purpose, during the relevant period, it entered into contracts of employment with various individuals. NAL contended that in doing so it was exercising functions delegated to it by both councils.
NAL argued that by reason of s 49(6) of the Interpretation Act 1987 (NSW), the wages it paid to employees are taken to have been payable by and to have been paid by the councils. Accordingly, it contended that the wages were exempt wages and not taxable wages.
On the other hand, the Chief Commissioner claimed that in entering into contracts of employment, NAL was contracting personally and not on behalf of the councils and in doing so was not exercising a delegated function.
The Court accepted NAL’s submission that the wages in respect of which payroll tax has been levied are exempt wages as they are taken to have been paid and payable by the councils by reason of the operation of s 49(6) of the Interpretation Act. It therefore held that the decision of the Chief Commissioner to issue the notice of assessment to NAL should be revoked. The Court said NAL was entitled to a refund with interest on the tax paid.
(Newcastle Airport Ltd v Chief Comr of State Revenue [2014] NSWSC 1501, NSW Supreme Court, White L, 31 October 2014.)
[LTN 213, 4/11/14]