Talking Tax – Issue 167


Queensland: Payroll tax grouping win for the taxpayer

In Telgrove Pty Ltd t/as P & E Francis Plant Hire v Commissioner of State Revenue [2019] QCAT 199, Telgrove Pty Ltd (Telgrove), as the designated group employer, had made an ‘exclusion order’ to request that Telgrove and 3 other entities be excluded from a list of six entities that were determined to be a payroll tax group by the Queensland Commissioner of State Revenue (Commissioner). The Commissioner rejected this exclusion application and issued reassessment notices to Telgrove to tax the six entities (Group Members) as a group from the 2011/12 financial year and apply penalty tax and interest for the period.

Telgrove objected to the reassessment notices. The objection was disallowed by the Commissioner.

Telgrove referred the matter to the Queensland Civil and Administrative Tribunal (Tribunal), which found that Telgrove’s exclusion order should have been granted. Accordingly, the Commissioner was required to set aside the reassessment notices issued to Telgrove, remit the penalty tax and interest charged and pay interest to Telgrove on the ‘overpaid’ amounts of Payroll Tax, penalty tax and interest from the date the overpaid amount was paid to the Commissioner to the date the Commissioner makes the refund.

Pursuant to section 74(2) of the Payroll Tax Act 1971 (Qld), the Commissioner may exclude a person from a group (make an Exclusion Order) if the Commissioner is satisfied 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 the group.’

Whether the test above is satisfied is a question of fact and degree that will depend on the circumstances of each individual case.

Broadly, the Tribunal acknowledged the following factors which supported the Commissioner’s decision against the Exclusion Order:

  • Telgrove’s purchase of goods from one Group Member when it ceased trading;
  • Telgrove’s hire and occasional purchase of goods from another Group Member (estimated at 10% of that Group Member’s sales and all at market rates);
  • The sole Director and 85% shareholder exerted some control over three of the other Group Members as a Director (though not as sole Director); and
  • A relatively large loan from one Group Member to Telgrove remained outstanding.

However, the Tribunal’s opinion was that these factors were ultimately outweighed by the following factors in favour of the Exclusion Order; broadly:

  • No shared resources or employees;
  • Telgrove’s premises were located at least 5km from the other businesses conducted by Group Members;
  • Separate day-to-day administration;
  • No collective purchases or sales made by Group Members with another party, despite the similar nature of the businesses.

In coming to this decision, the Tribunal placed the most weight on the nature and day-to-day operation of the businesses of the Group Members, and less weight on the formal control of the entities and irregular (albeit significant) transactions between them.

Whilst this decision provides some helpful guidance on the type and weighting of factors to be considered for an Exclusion Order (and equivalent exclusions from grouping in other jurisdictions), it remains a highly factual analysis and those seeking to dispute grouping from payroll tax should seek professional advice.

ATO warns about scammers at Tax Time

The Australian Taxation Office (ATO) has again raised a warning about scammers attempting to impersonate the ATO and its officers in order to trick people into paying money or giving out personal information.

Taxpayers who receive any form of communication claiming to be from the ATO which they believe to be suspicious or unusual should call the ATO directly on 1800 008 540.

Investigations by the ATO have revealed that it is becoming increasingly difficult to distinguish between legitimate interactions with the ATO and interactions with increasingly sophisticated scammers. The ATO has published a list of scam alerts for taxpayers who believe they may have been a victim of scamming and provided a list of factors which suggest something might be a scam. These factors include:

  • The use of unsolicited pre-recorded messages (either when you answer the call or left as a voicemail message). The ATO will never send unsolicited pre-recorded messages.
  • Threats of immediate arrest. The ATO will never threaten to make an immediate arrest.
  • Refusing to allow you to speak to a trusted tax advisor or your regular tax agent.
  • Requesting payment by iTunes, Google Play, STEAM, Bitcoin or other unusual methods of payment.
  • Requesting that you pay a fee (usually by credit card) to receive a refund.

Charities risk losing charity status, warns ACNC

The Australian Charities and Not-for-profits Commission (ACNC) has issued a stark warning that charities that fail to submit their annual reports to the ACNC are at risk of losing their charitable status.

Charities that are registered with the ACNC must submit an Annual Information Statement to the ACNC about their operations. If a charity fails to submit two Annual Information Statements, that charity will have its charity status revoked along with its access to tax concessions that are available to charities.

The ACNC Commissioner, the Honourable Dr Gary Johns, has stated that whilst the vast majority of charities are doing the right thing, there is a small proportion of charities that have failed to meet their reporting requirements.

According to Dr Johns, those organisations that have not met their reporting obligations ‘will lose their registration as a charity if they do not submit their outstanding Annual Information Statements by 26 August 2019’.

Charities that are yet to lodge their Annual Information Statements can do so by logging into the ACNC Charity Portal.

Charities are also being urged to ensure their contact information is up to date following difficulties faced by the ACNC when attempting to contact charities in relation to their reporting obligations.

This article was written with the assistance of Charlie Renney, Lawyer.

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Anthony Bradica

Anthony specialises in taxation planning and structuring for corporate clients, including advising on capital raisings and M&A.

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