The Qld Civil and Administrative Tribunal has confirmed the decision of the Qld Commissioner of State Revenue to deny the discretion to de-group 3 “independent pharmacies” from a group for payroll tax purposes thereby affirming payroll tax assessments issued for the 2003 to 2008 financial years.
The case essentially concerned the controlling interests of 2 individuals (Ms M and her late mother, Mrs M) during the relevant periods. Mrs M passed away on 2 October 2005. Prior to October 2005, Ms M controlled one “wholly owned pharmacy” and had a half-interest as partner in another “independent pharmacy” and its respective “service company”. Under the will of the late Mrs M, all her relevant business interests were passed to her daughter. Those interests included: ownership in another “wholly owned pharmacy”; partnership agreements with 2 more “independent pharmacies” and their respective “service companies”, and directorship in a corporate entity (Verra) which employed a retail manager, a general manager and 3 bookkeepers. The Tribunal noted the “wholly owned pharmacies” have been referred to as the businesses of Verra. The taxpayers contended the “independent pharmacies” should be excluded from the group.
The Tribunal said the issue was whether it was appropriate to exercise the de-grouping discretion to exclude the “independent pharmacies” from the group pursuant to either s 68(2), s 69(7) or s 71(3) of the Payroll Tax Act 1971 (Vic) (as it stood at the time). It concluded that, in the circumstances, it would not be just and reasonable that the discretion be exercised. The Tribunal was not satisfied the businesses of the independent pharmacies were carried out “substantially independently of” any other member of the group.
(Verra Pty Ltd as trustee for the Pharmacies Services Trust & Ors v Comr of State Revenue [2012] QCAT 64, Qld Civil and Administrative Tribunal, McDermott M, 3 February 2012.)
[LTN 40, 29/2]