The NSW Supreme Court has ordered that payroll tax assessments for the 2005 to 2009 years issued to a taxpayer be remitted to the Commissioner for redetermination in accordance with its findings.
The taxpayer sells various snack foods and drinks through vending machines and engages independent contractors to, among various things, store, transport and restock the vending machines. The Commissioner had assessed the taxpayer to payroll tax on the commissions paid to NSW contractors except for a 25% allowance for the non-labour component of the payments. The obligations of the contractors and commission amount are specified in “Goods Distribution Agreements”.
The Supreme Court made various findings as to whether identified services provided by the contractors to the taxpayer under the Agreements were (or were not) “ancillary to the conveyance of goods by means of vehicle provided by the person conveying them” per the exception contained in s 32(2)(d)(i) of the Payroll Tax Act 2007 (NSW) (and s 3A(1A)(a) of the 1971 Act). The Court suggested a figure of 35% as a “better estimate of non-labour costs”. The Court affirmed the imposition of penalties in respect of the tax default for the years in question, but held there should be no penalty for the 2009 year. (The Smith’s Snackfood Company Limited v Chief Comr of State Revenue (NSW) [2012] NSWSC 998, NSW Supreme Court, Gzell J, 28 August 2012.)
[LTN 167, 29/8]