In Qualweld Australia Pty Limited v Chief Commissioner of State Revenue [2014] NSWCATAD 227, the Tribunal considered whether payments made by a business in the welding industry (Qualweld) to its welding contractors were subject to payroll tax under the “employment agency contract” provisions of the Payroll Tax Act 2007 (NSW).

In coming to its decision, the Tribunal rejected Qualweld’s assertion that it carried on a business of delivering significant welding projects for its clients. Instead, the Tribunal agreed with the Chief Commissioner in that, while elements of Qualweld’s business went beyond the provision of welders for its clients, the central and predominant aspect of the business carried on by Qualweld was the supply of welders to its clients.

In reaching this decision, the Tribunal paid particular attention to the following factors:

  • documentary evidence including invoices and contracts, which were consistent with the view that Qualweld was essentially engaged to deliver the services of particular tradespeople for its clients;

  • Qualweld had no employees other than the sole director of the company and his wife; and
  • the vast majority of Qualweld’s revenue was generated from the provision of welders to its clients, as referenced by subcontractor costs in excess of 85% of gross revenue annually. 

[IT 13.2.15]