The AAT has upheld the Commissioner’s assessments finding that drivers employed by the taxpayer were common law “employees” of the taxpayer and not independent contractors.

The taxpayer had an agreement with a company for the delivery of the company’s bakery products. During the relevant period, the taxpayer engaged a number of “drivers” to make the deliveries. The Commissioner audited the taxpayer re its obligations under PAYG withholding, super guarantee and FBT and determined that all of the drivers the taxpayer paid throughout the relevant period were common law “employees” of the taxpayer and not “independent contractors” as the taxpayer argued. The Commissioner’s conclusion was based on a number of points, including that the contractors were paid solely for their labour, they did not own or lease their own vehicle, and they did not have any control and they did not delegate any of the work. An assessment of tax liability and penalty was issued and the taxpayer’s objection was disallowed.

The AAT found that the relevant drivers were “employees” of the taxpayer throughout the quarters ended 30 September 2009 to 30 June 2011 and that the taxpayer had failed to withhold an amount from the payments it made to them in those quarters for the purposes of s 12-35 of Sch 1 to the TAA. The Tribunal said it followed that the taxpayer was liable, pursuant to s 16-30 of Sch 1 to the TAA, to pay the Commissioner a penalty equal to the amount that it failed to withhold.

The Tribunal considered the taxpayer had not discharged its burden of proof, on the balance of probabilities, that the assessment was excessive. It also found there was nothing in the particular circumstances of the case to warrant a remission of the administrative penalty imposed.

(AAT Case [2013] AATA 358, Re Trustee for the Farant Family Trust and FCT, AAT, Walsh SM, AAT Ref: 2012/3167-3168, 30 May 2013.)

[LTN 106, 4/6/13]