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    A "scary" payroll tax decision


    In brief:    In this case, the individual trustees of an SMSF (a husband and wife) and the corporate trustee of related custodian trusts were included in a payroll tax group. Since each member of a group is jointly and severally liable for the payroll tax liabilities of all group members, those trustees faced substantial payroll tax debts for assessments on several operating entities in the group. In an application for judicial review, the Qld Supreme Court held that there was no legal error by the Commissioner in refusing an application to exclude the trustees from the relevant payroll tax group.

    More:    This matter illustrates the readiness of State Revenue Offices to utilise the very broad grouping provisions that apply for payroll tax purposes, although here there were dealings between the trustees and relevant operating entities that made it more difficult to establish that the trustees operated independently of the operating entities. It is somewhat counterintuitive that trustees of an SMSF and custodian trusts should be part of a payroll tax group, since they invariably do not carry on any business or engage workers. The Commissioner emphasised the definition in s 66 of the Payroll Tax Act 1971 (Qld), under which ‘business includes …. the carrying on of a trust, including a dormant trust’. And the Judge accepted that the breadth of intention of that provision would encompass a trustee merely holding assets as a bare trustee. That same definition appears in the payroll tax legislation of other States. (Scott and Bird v Commissioner of State Revenue [2016] QSC 132)



    05 Oct 2016

    Topic: State Taxes

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