AEW Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 259

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: AEW Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 259 Hearing dates: 4 April 2019 Date of orders: 12 December 2019 Decision date: 12 December 2019 Jurisdiction: Administrative and Equal Opportunity Division Before: S Higgins, Senior Member Decision: The decision of the Chief Commissioner, made on 10 October 2017, is confirmed. Catchwords: TAXES AND DUTIES - Payroll Tax – grouping provisions – discretion to de- group Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Payroll Tax Act 2007 (NSW) Taxation Administration Act 1996 (NSW), Cases Cited: Boston Sales and Marketing Pty Ltd v Chief Commissioner State Revenue [2014] NSWCATAD 139 Chief Commissioner of State Revenue v Seovic Civil Engineering Pty Ltd [2014] NSWCATAP 94 Lombard Farms Pty Ltd v CCSR [2013] NSWADTAP 42 Toveety Maintenance Services Pty Limited v The Chief Commissioner of State Revenue [2015] NSWCATAD 137 Texts Cited: None cited Category: Principal judgment Parties: AEW Engineering Pty Ltd (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: G Stapleton (Respondent)

Solicitors: G Wells (Applicant) Crown Solicitor (Respondent) File Number(s): 2018/00196861 Publication restriction: Nil

Reasons for decision 1. The applicant, AEW Engineering Pty Ltd (AEW), seeks review of the 10 October 2017 decision of the respondent, the NSW Chief Commissioner of State Revenue (the Chief Commissioner) to: 1. assess it, All Engineering Services Pty Ltd (AllEng) and Hagwell Pty Ltd (Hagwell) as trustee for the Wells Family Trust (WFT) (Hagwell atf WFT) as a group for payroll tax purposes under ss 72 and 74 of the Payroll Tax Act 2007 (NSW) (PTA); and 2. to decline to exercise his discretion to de-group any of the entities under s 79(1) of that Act. 1. The Chief Commissioner's decision the subject of review in this application applies to the payroll tax assessments for the group for the financial years ended 30 June 2013 to 30 June 2017. 2. The applicant (AEW) does not dispute that, at the relevant time, the grouping provisions in ss 72 and 74 of the PTA applied in grouping the three entities into a single group for payroll tax purposes. However, AEW contends that the Chief Commissioner incorrectly failed to exercise his discretion under s 79(1) of the PTA to de-group the entities. The discretion contained in this section has been described a 'final step' in the grouping process under Part 5 of the PTA once a 'group' is found to exist under the provisions of that Part: Boston Sales and Marketing Pty Ltd v Chief Commissioner State Revenue [2014] NSWCATAD 139 at [17]. 3. Section 79 of the PTA provides as follows: 79 Exclusion of persons from groups (1) The Chief Commissioner may, by order in writing, determine that a person who would, but for the determination, be a member of a group is not a member of the group. (2) The Chief Commissioner may only make such a determination if satisfied, having regard to the nature and degree of ownership and control of the businesses, the nature of the businesses and any other matters the Chief Commissioner considers relevant, that a business carried on by the person, is carried on independently of, and is not connected with the carrying on of, a business carried on by any other member of that group. (3) The Chief Commissioner cannot exclude a person from a group if the person is a body corporate that, by reason of section 50 of the Corporations Act 2001 of the Commonwealth, is related to another body corporate that is a member of that group. (4) This section extends to a group constituted by reason of section 74 (Smaller groups subsumed by larger groups). (5) A determination can be expressed to take effect on a date that is earlier than the date of the determination. (6) The Chief Commissioner may by order in writing revoke a determination that applies in respect of a person if satisfied that the circumstances in which a determination may be made do not apply to the person. (7) The revocation of a determination can be expressed to take effect on a date that is earlier than the date of the determination. 1. It is the contention of AEW that the businesses of each entity within the group was carried on entirely independently and separate from the others in the group and were not connected with the carrying on of, a business carried on by any other entity of that group. To the extent that there was a connection, AEW contended that these were irregular, insignificant or inconsequential and did not affect the business of the entities in a real or practical sense. 2. The Chief Commissioner, on the other hand contended that he had correctly decided not to exercise his discretion under s 79(1) of the PTA to de-group the entities because the businesses of each entity within the group were not carried on entirely independently and separate from the others and were connected with the carrying on of, a business carried on by the other entities of that group. That is, the connections were material in that they were more than casual, irregular or occasional and affected the businesses of each entity in a real or practical sense. 3. In these proceedings, Gary Wells (Gary), a director and shareholder of Hagwell and a beneficiary under the WFT, appeared as agent on behalf of Alan Wells (Alan), his father, the sole director and shareholder of AEW. 4. There is no dispute that the Tribunal has jurisdiction to hear and determine this application of AEW. The role of the Tribunal is to determine the correct and preferable decision having regard to the material before it, including any relevant factual material and any applicable law: Administrative Decisions Review Act 1997, s 63(1) and Taxation Administration Act 1996 (NSW), s 101. 5. In this application, the onus is on the applicant, AEW, to establish, on the balance of probabilities that a determination should be made, under s 79(1) of the PTA, to de-group the entities for the relevant payroll tax years: Taxation Administration Act, s 100(3). 6. For the reasons that follow, I am not satisfied that AEW has discharged its onus. Hence I have found that the correct and preferred decision is to decline to make a determination under s 79(1) of the PTA to de-group AEW and the group and made an order that the decision of the Chief Commissioner should be confirmed.