Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227 Hearing dates: 30 September and 1 October 2014 Decision date: 22 December 2014 Jurisdiction: Administrative and Equal Opportunity Division Before: R Deutsch, Senior Member Decision: The decision under review is affirmed Catchwords: Employment agency contracts, payroll tax, procure, wages, penalties, reasonable care Legislation Cited: Payroll Tax Act 2007 Taxation Administration Act 1996 Cases Cited: CXC Consulting Pty Ltd v Commissioner of State Revenue (2013) VSC 492

Freelance Global Ltd v Chief Commissioner of State Revenue (2014) NSWSC 127

On Call Interpreters & Translators Agency Pty Ltd v Commissioner of Taxation (No 3) (2011) FCA 366

RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue (2004) NSW ADT 64

Taneja v Commissioner of Taxation (2009) AATA 87

Value Engineering (Australasia) Pty Ltd v Commissioner of State Taxation (WA) (1985) Category: Principal judgment Parties: Qualweld Australia Pty Ltd (Applicant)

Chief Commissioner of State Revenue (Respondent) Representation: Qualweld Australia Pty Ltd (Applicant in person) File Number(s): 1410067

reasons for decision

INTRODUCTION - WHAT THIS CASE IS ALL ABOUT! 1This case concerns an application by the Applicant under s 96 of the Taxation Administration Act 1996 (NSW) (the TA Act) for a review of an assessment for payroll tax for the years ended 30 June 2009 to 30 June 2012 (the relevant period). 2The Applicant is involved in the welding industry. In this case, the issue that arises is whether amounts paid to welders who the Applicant uses on certain projects count as wages or salary paid to employees for the purposes of the Payroll Tax Act 2007 (the Payroll Tax Act). 3The welders are not employees of the Applicant at general law and therefore the amounts paid to them are not ordinarily wages or salary. However, the welders may nonetheless be treated as employees and the amounts paid to them as wages or salary under certain extended concepts covered by the Payroll Tax Act. There are two such possibilities - Division 8 and Division 7 of that Act 4The primary issue (the Employment Agency Issue) concerns the application of Division 8 of the Payroll Tax Act 2007 ( the Payroll Tax Act) and specifically whether payments made by the Applicant to its contractors during the relevant period were paid pursuant to "employment agency contracts " as defined in s 37 of the Act. The Applicant asserts that the payments were not so paid; the Respondent asserts they were. 5If the primary issue is resolved in favour of the Applicant, there remains a further issue (the Relevant Contracts Issue) as to whether Division 7 of the Payroll Tax Act and specifically whether payments made by the Applicant to its contractors during the relevant period were paid pursuant to "relevant contracts" as defined in s 32 of the Act. Again the Applicant asserts that they were not so paid, largely because the exceptions to the definition of relevant contracts in s 32(2) applies; the Respondent asserts that they were so paid largely because the exceptions to the definition of relevant contracts do not apply. Again, it is worth stressing that this issue becomes relevant only if the Applicant is successful in respect of the Employment Agency Issue. 6If either of these Divisions is held to apply, there is a further issue (the Penalty Issue) as to whether the Applicant failed to take reasonable care in determining its payroll tax obligations. The Applicant contends there was no failure to take reasonable care; the Respondent asserts there was.