The NSW Administrative Decisions Tribunal has affirmed the Commissioner’s decision to group a taxpayer with another company for payroll tax purposes for the tax years ended 30 June 2007 and 30 June 2008.
The taxpayer is a manufacturer of giftware products. From 2002, 60% of the shares were held by Mr & Mrs S and the other 40% of the shares by E Co. The taxpayer contended there was a shareholder’s agreement that provided that the taxpayer’s business operate as though the shareholdings were 50% each. Prior to 2002, the share ownership was split 50/50. The other company (“J Co”) was the trustee of the family trust of Mr & Mrs S and had an issued share capital of 2 id=”mce_marker” shares, of which Mr S held one, and Mrs S the other. The Tribunal heard details of the history of the entities and how it came about that in 2010, J Co purchased the remaining 40% share from E Co.
The Tribunal found that Mr & Mrs S had a controlling interest in both entities, therefore they were deemed to constitute a primary group within s 106I(1) of the Taxation Administration Act 1997 (NSW) and s 72(1) of the Payroll Tax Act 2007 (NSW), for the relevant years. Accordingly, the assessments were affirmed.
(Pastel Pines International v Chief Comr of State Revenue [2013] NSWADT 49, NSW Administrative Decisions Tribunal, Walker JM, 1 March 2013.)
[LTN 42, 4/3/13]