Nowlan Enterprises Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADT 21

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Nowlan Enterprises Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADT 21 Hearing dates: 17 May 2012 Decision date: 30 January 2013 Jurisdiction: Revenue Division Before: J Block, Judicial member Decision: The decision under review is affirmed Catchwords: Grouping of two unrelated companies- wide meaning to be attributed to "in connection with"- genesis of relevant legislation- consideration of the discretion Legislation Cited: Payroll Tax Act 2007 Cases Cited: Muir Electrical Co Pty v Commissioner of Stale Revenue (2001) 4 VR 70; [2001] VSCA 86 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR Conte Mechanical and Electrical Services Ply Ltd v CSR [201111 VSC 104 Mead Packaging (Aust) Pty Ltd v Cmr of Pay-roll Tax (NSW) [(1978) ATC 4164 Category: Principal judgment Parties: Nowlan Enterprises Pty Ltd (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel J Mitchell (Respondent) P Beazley (Applicant) Crown Solicitor (Respondent) File Number(s): 116025

REasons for decision

Part A Introduction and preliminary 1The decision in respect of which the Applicant seeks review (pursuant to an application dated 24 March 2011) is an objection decision by the Respondent (who is sometimes referred to in these reasons as the "Chief Commissioner"); in accordance with that objection decision the Chief Commissioner found that the Applicant and Danny Nowlan Transport Pty Ltd ("DNT") should be grouped for payroll tax in respect of the payroll tax years ending 30 June 2008 and 30 June 2009 ("the Relevant Years"). 2The Tribunal had before it the documents lodged in accordance with section 58 of the Administrative Decisions Tribunal Act 1997; in addition it admitted exhibits as follows: Exhibit A1 is an affidavit by Danny Craig Nowlan dated 9 March 2012. Although the affidavit proper consists of 3 pages the annexures to Exhibit A1 run to more than 500 pages; Exhibit R1 is a bundle of documents tendered by the Chief Commissioner; in respect of Exhibit R1 Mr Mitchell advised the Tribunal (TS33); "But by way of explanation there/s a large amount of summonsed material, it is largely duplicated in the affidavit of Mr Nowlan that your Honour has just accepted into evidence. To the extent that it's not duplicated the additional documents form part of this tender bundle. So on that basis the summons material does not need to be tendered, but I note that it is in the Tribunal file." 3At the time of the hearing the Tribunal had before it outline submissions by the Applicant dated 16 May 2012 and in addition outline submissions by the Chief Commissioner dated 2 May 2012 ("RS"). 4Oral evidence was given by Mr Danny Nowlan ("Danny"); his examination in chief was confined to his confirmation of the content of Exhibit A1 and after which he was cross-examined at some length by Mr. Mitchell; that cross-examination was followed by a brief re-examination. Danny's evidence will be dealt with in more detail later in these reasons. 5At the end of the hearing the parties were allowed lengthy periods of time within which to file supplementary submissions and in order (inter alia) to deal with the evidence before the Tribunal. In accordance with those arrangements the Applicant was obliged to file its further submissions by 27 July 2012; the Respondent was then obliged to file his further submissions by 27 August 2012; the Applicant was in addition granted a right of reply to be exercised by 10 September 2012. The Applicant did not comply with its obligations under the time-table and in consequence of which a number of directions hearings took place. In the result the Applicant's supplementary submissions were filed on 24 October 2012 while the Respondent's supplementary submissions were filed on 10 December 2012. This decision has been prepared following a directions hearing on 16 January 2013 and at which JM Hole directed that the matter was ready for decision. 6It is convenient at this early stage to draw on the content of RS under the head of "Facts' and contained in clause 2 of RS(and notwithstanding the fact that the role of Ruth in the conduct of the Applicant does not, on the evidence before the Tribunal, appear to have accorded with its description in clause 2.1 of RS) as follows: 2.1 The Applicant is a road freight transport company that operates heavy industrial transportation: 110. It contracts with large mining and other companies to haul their products locally and interstate. In the Relevant Years its directors were Danny Craig Nowlan ("Danny") and Ruth Nowlan ("Ruth"). Both held executive management roles in the Applicant's business. Its sole shareholder was Ruth. Ruth is Danny's mother. 2.2 Danny Nowlan Transport Pty Limited ACN 054 357 6"(DNT") is also a road freight transport company that operates heavy industrial transportation. In the Relevant Years its sole director and shareholder was Danny. In the Relevant Years DNT's principal place of business was the same as that of the Applicant, namely 18 Old Punt Road, Tomago, New South Wales: 90 and 148. DNT was a subcontractor to the Applicant and was paid $517,806 in 2008 and $459, 537 in 2009: 133 and 134. That constituted all of DNT's income for the Relevant Years. In the Relevant Years there was an unsecured loan from the Applicant to DNT for $308,147 in 2008 and $358,147 in 2009. 2.3 DNT had wage expenses of $100,307 in 2008 and $93,274 in 2009: 18, see also 40, 45 and 189. DNT paid salaries to Steven Selby in 2008 and 2009 and Owen Griffiths in 2008. 2.4 The arrangements between the Applicant and DNT were such that when the Applicant required further trucks to fulfil its contracts with customers, the Applicant would subcontract the work to other truck owners, including DNT. It was a standing practice that such independent contractors would so fulfil the Applicant's contracts as the Applicant had more work than trucks available. DNT submitted tax invoices for work done based on the weight of the load and distance travelled. 2.5 On 30 September 2010 the Chief Commissioner assessed the Applicant for payroll tax for the years ended 30 June 2008 and 30 June 2009. The Applicant was held to be liable for $6,370.92 plus interest for the 2008 year and $6,562.32 plus interest for the 2009 year: 169. 2.6 The reasons for this assessment were also provided by letter of the same date; 164. The Chief Commissioner determined that DNT should be grouped for payroll tax purposes with the Applicant pursuant to s 71(3) of the Act. 2.7 On 2 December 2010 the Applicant lodged an objection to that assessment: 190. The Applicant objected to the grouping of DNT with the Applicant: 195ff. 3 2.8. On 20 January 2011 a delegate of the Chief Commissioner disallowed the objection and affirmed the assessment. 7Words and phrases defined in clause 2 of RS have, unless the context requires otherwise, the same meanings when used in these reasons. 8It will be noted that some subclauses in clause 2 of RS contain references to numbers; those number references relate to the section 58 documents.