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Salemade Pty Limited v Commissioner of State Revenue[2021] QCA 164

Salemade Pty Limited v Commissioner of State Revenue[2021] QCA 164

SUPREME COURT OF QUEENSLAND

CITATION:

Salemade Pty Limited & Ors v Commissioner of State Revenue [2021] QCA 164

PARTIES:

SALEMADE PTY LIMITED

ACN 102 498 153 AS TRUSTEE FOR THE POSIBLE UNIT TRUST

(first appellant)

SALEMADE PTY LIMITED

ACN 102 498 153 AS TRUSTEE FOR THE BIG TREE DISCRETIONARY TRUST

(second appellant)

SALEMADE PTY LIMITED

ACN 102 498 153 AS TRUSTEE FOR THE SALEMADE UNIT TRUST

(third appellant)

AUSTRALIAN TABLEFORM DESIGN PTY LIMITED

ACN 119 530 399

(fourth appellant)

OAKDALE BUILDING SERVICES PTY LIMITED

ACN 091 173 812

(fifth appellant)

OAKDALE GROUP PTY LIMITED

ACN 146 634 648

(sixth appellant)

LILLIES GROUP PTY LIMITED

ACN 100 080 064

(seventh appellant)

ACN 123 577 453 PTY LIMITED (IN LIQUIDATION) (FORMERLY, OAKDALE QUEENSLAND PTY LIMITED)

(eighth appellant)

POPPY’S ON OAKDALE ROAD PTY LIMITED

ACN 115 475 860 AS TRUSTEE FOR THE POPPY’S UNIT TRUST

(ninth appellant)

v

COMMISSIONER OF STATE REVENUE

(respondent)

FILE NO/S:

Appeal No 3148 of 2021

SC No 9327 of 2018

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2021] QSC 19 (Dalton J)

DELIVERED ON:

10 August 2021

DELIVERED AT:

Brisbane

HEARING DATE:

29 July 2021

JUDGES:

Morrison, Mullins and Bond JJA

ORDERS:

  1. 1.The appeal is dismissed, with costs.
  2. 2.The parties have liberty to apply in relation to the form of order, within 4 days of the date of the delivery of this judgment.

CATCHWORDS:

TAXES AND DUTIES – PAYROLL TAX – OBJECTIONS, APPEALS AND REVIEWS – where the appellants appealed against certain decisions by the respondent on their objections to a series of payroll tax assessments and amended assessments issued pursuant to the Payroll Tax Act 1971 (Qld) – where the primary judge dismissed the appeal – whether s 71(2)(c)(i) of the Payroll Tax Act 1971 (Qld) encompasses the power of a director of a single director company to make a written resolution – whether there was sufficient evidence to prove that the New South Wales payments, which were the basis of the subject assessments, were not “interstate wages” for the purposes of the Payroll Tax Act 1971 (Qld)

TAXES AND DUTIES – PAYROLL TAX – LIABILITY TO TAXATION – EXEMPTIONS – GROUPING OF EMPLOYERS – whether the director of multiple single director companies has a controlling interest in businesses carried on by those companies under s 71(2)(c)(i) of the Payroll Tax Act 1971 (Qld) – where the primary judge noted the literal terms of s 71(2)(c)(i), but held that the provision should be interpreted to apply to such a director – whether the primary judge erred in her construction of that provision

TAXES AND DUTIES – PAYROLL TAX – ASSESSMENT, COLLECTION AND RECOVERY OF PAYROLL TAX – where the various assessments challenged by the appellants included as “interstate wages” certain payments made by the fifth and sixth appellants to certain contractors – where the Commissioner and primary judge both concluded that the appellants had not demonstrated that the payments fell within the applicable exemptions – where the appellants relied on documents exhibited to the sole director’s affidavits to show that certain payments fell within particular exemptions under the Payroll Tax Act 2007 (NSW) – where the appellants also relied on correspondence to show that the Office of State Revenue must have concluded that the payments concerned fell within the relevant exemptions and that the Commissioner in Queensland was bound by that conclusion

Corporations Act 2001 (Cth), s 248B

Payroll Tax Act 1971 (Qld), s 13B, s 33, s 71

Payroll Tax Act 2007 (NSW), s 32(2)

Taxation Administration Act 2001 (Qld), s 69, s 70A

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41, considered

Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168, cited

R v A2 (2019) 93 ALJR 1106; [2019] HCA 35, followed

Re Hastings Deering Pty Ltd (1985) 9 ACLR 755, cited

COUNSEL:

H G Lakis for the appellants

G J Del Villar QC, with J S Byrne, for the respondent

SOLICITORS:

PPM Tax & Legal Pty Ltd for the appellants

Crown Law for the respondent
  1. [1]
    MORRISON JA:  I have read the reasons of Bond JA and agree with those reasons and the order his Honour proposes.
  2. [2]
    MULLINS JA:  I agree with Bond JA.
  3. [3]
    BOND JA:  The appellants were dissatisfied with certain decisions made by the respondent (the Commissioner) on their objections to a series of payroll tax assessments and amended assessments issued pursuant to the Payroll Tax Act 1971 (Qld) (the PTA).  They appealed to the Supreme Court of Queensland pursuant to s 69 of the Taxation Administration Act 2001 (Qld) (the TAA).
  4. [4]
    The primary judge dismissed the appeal, and, in the course of so doing, dealt with and dismissed a plethora of discrete factual and legal arguments which the appellants had raised in order to challenge the Commissioner’s decision on their objections.
  5. [5]
    The appellants’ notice of appeal to this Court raised five grounds of appeal, with the second ground of appeal being advanced on three bases.  All grounds were pressed in the appellants’ written submissions and resisted in the Commissioner’s written submissions.  However, in the appellants’ written submissions in reply, the appellants abandoned the second and third bases on which ground 2 had been advanced and also grounds 3 and 4.   And, at the commencement of the argument before this Court, the appellants also abandoned the remaining basis on which ground 2 had been pressed.
  6. [6]
    Only grounds 1 and 5 remained.  Neither had merit.  The appeal should be dismissed with costs.

Ground 1 – Erroneous identification of the payroll tax group

The issue on appeal

  1. [7]
    Generally speaking, payroll tax under the PTA is a tax on “taxable wages” paid by an employer to employees for services performed or rendered in such a way as to have a particular nexus with Queensland during each financial year: see Part 2 Division 1 Subdivision 1 of the PTA.  Payroll tax is paid by the employer by whom taxable wages are paid or payable: s 12.
  2. [8]
    In some circumstances, the PTA provides that a number of legal persons should be grouped together as the employer for payroll tax purposes.  In those circumstances:
    1. (a)
      One employer from the group, known as the designated group employer (DGE), is designated and, as such, will become liable for payroll tax calculated in accordance with specific statutory formulae: ss 34(1), 42(1) and 75.
    2. (b)
      If the DGE does not pay its liability, all group members are jointly and severally liable for any unpaid amounts of payroll tax and that is so whether or not the group member was an employer during the relevant period: ss 34(2), 42(2) and 51A.
    3. (c)
      A DGE’s payroll tax amount is calculated by applying the appropriate rate of payroll tax to the amount (if any) by which  total taxable wages exceeds a calculated deduction: see ss 33 and 41 which specify the formulae by which the deduction is calculated.
  3. [9]
    There are several alternative statutory provisions, any of which may determine that a person is a member of a group: see, generally, Divisions 1 to 3 of Part 4 of the PTA.  Amongst other things:
    1. (a)
      companies constitute a group if they are “related bodies corporate” within the meaning of s 9 of the Corporations Act 2001 (Cth): s 69;
    2. (b)
      groups may arise from the use of common employees in connection with one or more businesses: s 70;
    3. (c)
      groups may arise where a person or set of persons has a “controlling interest” in each of two businesses: s 71; and
    4. (d)
      groups may arise from the tracing of interests in corporations, such that a person or set of associated persons and a corporation constitute a group if they have a controlling interest in the corporation: ss 72 and 74A to 74G.
  4. [10]
    The issue on appeal concerned the identification of a group by the application of s 71, which was in these terms:
  1. “71.Groups of commonly controlled businesses
  1. (1)
    If a person or set of persons has a controlling interest in each of 2 businesses, the persons who carry on those businesses constitute a group.

Note—

Section 74 allows the commissioner to exclude, for payroll tax purposes, persons from a group constituted under this section in some circumstances.

  1. (2)
    For this section, a person or set of persons has a controlling interest in a business if any of the following applies—
  1. (a)
    …
  1. (b)
    …
  1. (c)
    for a business carried on by a corporation—
  1. (i)
    the person or each person in the set of persons is a director of the corporation, and the person or set of persons is entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation;
  1. (ii)
    …

…”

  1. [11]
    Mr Douglas Crane was the sole director of the fourth, fifth, sixth and eighth appellants.  The Commissioner had concluded that Mr Crane had a controlling interest in those appellants by reason of s 71(2)(c)(i) of the PTA and, accordingly, they should be grouped.
  2. [12]
    The appellants’ argument before the primary judge was that because Mr Crane was the sole director of those entities and a single director cannot have “meetings” of directors, Mr Crane did not come within s 71(2)(c)(i) because he could not be regarded as “entitled to exercise more than 50% of the voting power at meetings of directors of the corporation”.
  3. [13]
    The primary judge rejected that construction.  She reasoned as follows:
    1. (a)
      Section 14 of the Pay-roll Tax Act Amendment Act 1975 (Qld) introduced s 16D(3)(a) to the then PTA.  It was in similar but not identical terms to s 71(2)(c).
    2. (b)
      She noted that the 1975 amendments introduced what was then a new “Part IVA – Grouping Provisions” and that relevant extrinsic evidence suggested the purpose for so doing was “to put an end to the scheme of payroll tax avoidance which has been developing whereby a business literally divides itself into a large number of separate employers solely for the purpose of gaining the advantage of multiple exemptions from payroll tax.”
    3. (c)
      At the time of the 1975 amendments, companies were required to have at least two directors.
    4. (d)
      Single director companies were permitted in 1998 and by the Company Law Review Act 1998 (Cth), s 248B of the Corporations Act was introduced to this effect:
  1. “(1)The director of a proprietary company that has only 1 director may pass a resolution by recording it and signing the record.
  1. (2)
    The director of a proprietary company that has only 1 director may make a declaration by recording it and signing the record.  Recording and signing the declaration satisfies any requirement in this Act that the declaration be made at a directors’ meeting.”
  1. (e)
    Relevant extrinsic evidence explained that the reason for the amendment to the Corporations Act was that one person could not conduct a meeting.
  2. (f)
    Section 16D(3)(a) of the PTA was replaced by s 71(2)(c) by the operation of s 15 of the Pay-roll Tax (Harmonisation) Amendment Act 2008 (Qld), at which time single director companies existed, and, by virtue of s 248B of the Corporations Act, sole directors could make resolutions and declarations by recording the resolution or the declaration and signing the record.  Relevant extrinsic evidence made evident that the legislative purpose of combating the mischief of splitting businesses so as to avoid payroll tax continued.
  3. (g)
    Despite the literal terms of s 71(2)(c)(i) of the PTA, it should be interpreted to apply when there is a corporation with a single director who by use of the facilitative provisions at s 248B of the Corporations Act is able to pass resolutions of the company without holding a meeting.
  4. (h)
    She noted and followed observations made by Kearney J in Re Hastings Deering Pty Ltd (1985) 9 ACLR 755, citing East v Bennett Bros Ltd [1911] 1 Ch D 163  that “... the expression ‘meeting’ can be used in particular contexts in an artificial sense which is satisfied by the presence of a single individual” and concluded that s 71(2)(c) was such a context.
  5. (i)
    She thought that such a construction gave effect to the evident purpose of the section in accordance with s 14 of the Acts Interpretation Act 1954 (Qld).
  6. (j)
    She noted that the authority which touched upon the matter – namely obiter observations by Brereton J in Climbform Australia Pty Limited [2016] NSWSC 1977 at [10] and the analysis of Senior Member Boxall in Integrated Construction Equipment Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 131 – supported her conclusion.
  1. [14]
    The appellants’ first ground of appeal was that the primary judge should have held that the reference in s 71(2)(c)(i) of the PTA to “voting power at meetings of the directors” of a corporation did not encompass the power of a sole director to make a written resolution as conferred by s 248B(1) of the Corporations Act 2001 (Cth).

Analysis

  1. [15]
    The debate in this Court focused upon whether the appellants’ construction was inappropriately literal (which was what the respondent contended) or the primary judge’s construction was inappropriately driven by a general conception of the purpose of the section at the expense of the text (which was what the appellants contended).
  2. [16]
    In my view, the construction which the primary judge reached was correct, essentially for the reasons she gave.
  3. [17]
    As a matter of principle, the methodology to be adopted is not seriously in doubt.  For present purposes, the relevant principles of statutory interpretation were set out in R v A2 (2019) 93 ALJR 1106 at 1117-1118 [32] to [37] per Kiefel CJ and Keane J with whom Nettle and Gordon JJ agreed (at 1136 [148]) (footnotes omitted):
  1. “[32]The method to be applied in construing a statute to ascertain the intended meaning of the words used is well settled.  It commences with a consideration of the words of the provision itself, but it does not end there.  A literal approach to construction, which requires the courts to obey the ordinary meaning or usage of the words of a provision, even if the result is improbable, has long been eschewed by this Court.  It is now accepted that even words having an apparently clear ordinary or grammatical meaning may be ascribed a different legal meaning after the process of construction is complete.  This is because consideration of the context for the provision may point to factors that tend against the ordinary usage of the words of the provision.
  2. [33]Consideration of the context for the provision is undertaken at the first stage of the process of construction.  Context is to be understood in its widest sense.  It includes surrounding statutory provisions, what may be drawn from other aspects of the statute and the statute as a whole.  It extends to the mischief which it may be seen that the statute is intended to remedy.  ‘Mischief’ is an old expression. It may be understood to refer to a state of affairs which to date the law has not addressed.  It is in that sense a defect in the law which is now sought to be remedied.  The mischief may point most clearly to what it is that the statute seeks to achieve.
  3. [34]This is not to suggest that a very general purpose of a statute will necessarily provide much context for a particular provision or that the words of the provision should be lost sight of in the process of construction.  These considerations were emphasised in the decisions of this Court upon which the Court of Criminal Appeal placed some weight.
  4. [35]The joint judgment in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) rejected an approach which paid no regard to the words of the provision and sought to apply the general purpose of the statute, to raise revenue, to derive a very different meaning from that which could be drawn from the terms of the provision.  The general purpose said nothing meaningful about the provision, the text of which clearly enough conveyed its intended operation.  Similarly, in Saeed v Minister for Immigration and Citizenship the court below was held to have failed to consider the actual terms of the section.  A general purpose of the statute, to address shortcomings identified in an earlier decision of this Court, was not as useful as the intention revealed by the terms of the statute itself.  In Baini v The Queen, it was necessary to reiterate that the question of whether there had been a ‘substantial miscarriage of justice’ within the meaning of the relevant provision required consideration of the text of the provision, not resort to paraphrases of the statutory language in extrinsic materials, other cases and different legislation.
  5. [36]These cases serve to remind that the text of a statute is important, for it contains the words being construed, and that a very general purpose may not detract from the meaning of those words.  As always with statutory construction, much depends upon the terms of the particular statute and what may be drawn from the context for and purpose of the provision.
  6. [37]None of these cases suggest a return to a literal approach to construction.  They do not suggest that the text should not be read in context and by reference to the mischief to which the provision is directed. They do not deny the possibility, adverted to in CIC Insurance Ltd v Bankstown Football Club Ltd, that in a particular case, ‘if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance’.  When a literal meaning of words in a statute does not conform to the evident purpose or policy of the particular provision, it is entirely appropriate for the courts to depart from the literal meaning.  A construction which promotes the purpose of a statute is to be preferred.”
  1. [18]
    Contrary to the appellants’ submission, the primary judge’s construction of s 71(2)(c)(i) did not represent the subordination of statutory text to some mere general conception of statutory purpose, such as had been criticised by the High Court in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27. Rather, consistently with the methodology described in R v A2, it reflected the construction of the statutory text by reference to a sensible understanding of a specific purposive context.  It was common ground that the relevant statutory context was that the evident specific purpose of the grouping provisions of the PTA was to prevent payroll tax avoidance by a person splitting a payroll over several entities controlled by that person with each entity claiming the relevant threshold.  Although that purpose existed when s 16D(3)(a) was enacted in 1975 (when sole director companies did not exist), it also existed when s 71(2)(c)(i) was enacted in 2008 (when sole director companies had existed for more than 10 years).  In this regard, it would be absurd to construe s 71(2)(c)(i) in a way which would regard the requisite controlling interest to exist where one of multiple directors was entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation, but not to exist where one sole director was the only person entitled to do that which could have been done at a meeting merely by signing a resolution to that effect.  I reject the notion, which was implicit in the appellants’ argument, that the legislature must have intended that outcome because if it wanted the provision to apply to sole director companies it would have said so when it introduced the section in 2008.
  2. [19]
    And, again contrary to the appellants’ submission, the primary judge did not “annihilate” the relevant parts of the statutory text.  Rather the primary judge construed the phrase “entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation” in a particular way, namely by regarding the phrase as comprehending the entitlement conferred on a sole director by the facilitative provisions at s 248B of the Corporations Act to exercise directors’ power.  It did this by regarding “meetings” as encompassing the occasions in which a sole director might formally exercise directors’ power and “voting power” as encompassing the deliberative power of such a director at such an occasion.[1]  It is true that there was an element of artificiality in doing so, but R v A2 makes plain that such a course can be appropriate when the context justifies it.  The context in this case was both the textual focus on power for the purpose of identification of “controlling interest” and the evident mischief to which the section was directed.[2]  It is not the first time that authority has regarded “a meeting” as being satisfied by something which is not, literally, “a meeting”.  And it is not much of a stretch to regard a sole director recording and signing a resolution as having exercised his or her “voting power” in favour of the resolution.  In this regard, it is instructive to quote in full the passage from the judgment of Kearney J in Re Hastings Deering Pty Ltd at 755, to which the primary judge referred:

“The general rule is that a plurality of persons is required to constitute a meeting: see Sharpe v Dawes [1876] 2 QBD 26.  However, as pointed out in The Law of Meetings by Shaw & Smith 5th ed at p 54, the expression ‘meeting’ can be used in particular contexts in an artificial sense which is satisfied by the presence of a single individual.  One of the illustrations of such an exception is afforded by the case where all the shares of a particular class in a company are held by a single holder.  Thus, it was held by Warrington J in East v Bennett Bros Ltd [1911] 1 Ch D 163 that in such circumstances the expression ‘meeting’ used in the memorandum and articles of the company was properly to be construed as comprehending the case where only one shareholder was entitled to attend.”

Conclusion

  1. [20]
    The appellants have failed to demonstrate that the primary judge erred in construing the section.  Ground 1 fails.

Ground 5 – Erroneous inclusion of contractor payments as “interstate wages”

The issue on appeal

  1. [21]
    The calculation of an employer’s liability for payroll tax in a particular year can be a matter of some complexity.
  2. [22]
    It suffices presently to note that one issue relevant to the calculation is the calculation of an “annual deduction” for the employer for a financial year.  That is done pursuant to a formula set out in s 29 (for employers other than a DGE for a group) and s 33 (where there is a DGE for a group).  One of the variables in that formula is the variable “IW”, which represents the amount of “interstate wages” paid or payable during a particular year.
  3. [23]
    The dictionary to the PTA defines –
    1. (a)
      “interstate wages” as “wages that are taxable wages within the meaning of a corresponding law”; and
    2. (b)
      “corresponding law” as:
  1. “(a)
    in relation to Queensland—a law in force in Queensland imposing on employers a tax on wages paid or payable by them and the assessment and collection of the tax, but does not include this Act; and
  2. (b)
    in relation to another State—means a law in force in the State imposing on employers a tax on wages paid or payable by them and the assessment and collection of the tax.”
  1. [24]
    The various assessments which were challenged by the appellants included as “interstate wages” certain payments made by the fifth and sixth appellants to certain contractors.  The substance of the appellants’ argument to the Commissioner, subsequently on appeal to the primary judge, and before this Court was:
    1. (a)
      the payments concerned were payments made to contractors in New South Wales;
    2. (b)
      the payments so made were not taxable wages within the meaning of the Payroll Tax Act 2007 (NSW) because they fell within one or more of the exemptions to the definition of “relevant contract” in that Act (those exemptions being essentially the same as the exemptions expressed in the corresponding section of the PTA); and
    3. (c)
      accordingly – given that the Payroll Tax Act 2007 (NSW) was the “corresponding law” in this context – the payments should not have been included as “interstate wages” by the Commissioner.
  2. [25]
    Neither the Commissioner nor the primary judge on appeal accepted that the appellants had demonstrated that the payments were such that they fell within the applicable exemptions.[3]  In each case, that conclusion reflected a conclusion based on a negative evaluation of the sufficiency of the evidence advanced by the appellants.
  3. [26]
    The appellants’ fifth ground of appeal contended that the primary judge should have held that, in the absence of evidence to the contrary, there was sufficient evidence that the New South Wales payments relied on as the basis of the subject assessments were not “interstate wages” for the purposes of the PTA.  Essentially, this ground of appeal asserted factual error by the primary judge.

Preliminary observations

  1. [27]
    Three preliminary observations should be made.
  2. [28]
    First, the appellants bore the onus of proof on the appeal before the primary judge: s 70A of the TAA.
  3. [29]
    Second, in a case where a tribunal of fact is deciding facts according to the civil standard of proof on limited material, the orthodox approach is to regard the tribunal of fact as dealing with two questions: first, what are the probabilities on the limited material which it has, and, second, whether that limited material is an appropriate basis on which to reach a reasonable decision: see Ho v Powell (2001) 51 NSWLR 572 at 576 [14] per Hodgson JA (with whom Beazley JA agreed).  Hodgson JA noted further (at [15]):

“In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so: …. As stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970:

‘[A]ll evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.’

…”

  1. [30]
    Third, proof that payments were not “taxable wages within the meaning of a corresponding law” because they fell within one or more of the exemptions to the definition of “relevant contract” was itself a matter of some complexity, in which much more would need to be demonstrated than merely showing that a payment had been made to someone who was a contractor.
  2. [31]
    The following observations may be made as to the matters which would need to be addressed by evidence.
  3. [32]
    The relevant exemptions were expressed in s 32 of the Payroll Tax Act 2007 (NSW) in these terms:
  1. “(1)In this Division, a relevant contract in relation to a financial year is a contract under which a person (the designated person) during that financial year, in the course of a business carried on by the designated person—
  1. (a)
    supplies to another person services for or in relation to the performance of work, or
  1. (b)
    has supplied to the designated person the services of persons for or in relation to the performance of work, or
  1. (c)
    gives out goods to natural persons for work to be performed by those persons in respect of those goods and for re-supply of the goods to the designated person or, where the designated person is a member of a group, to another member of that group.
  1. (2)
    However, a relevant contract does not include a contract of service or a contract under which a person (the designated person) during a financial year in the course of a business carried on by the designated person—
  1. (a)
    is supplied with services for or in relation to the performance of work that are ancillary to the supply of goods under the contract by the person by whom the services are supplied or to the use of goods which are the property of that person, or
  1. (b)
    is supplied with services for or in relation to the performance of work where—
  1. (i)
    those services are of a kind not ordinarily required by the designated person and are performed by a person who ordinarily performs services of that kind to the public generally, or
  1. (ii)
    …, or
  1. (iii)
    those services are provided for a period that does not exceed 90 days or for periods that, in the aggregate, do not exceed 90 days in that financial year and are not services—
  1. (A)
    provided by a person by whom similar services are provided to the designated person, or
  1. (B)
    for or in relation to the performance of work where any of the persons who perform the work also perform similar work for the designated person,

for periods that, in the aggregate, exceed 90 days in that financial year, or

  1. (iv)
    …
  1. (c)
    is supplied by a person (the contractor) with services for or in relation to the performance of work under a contract to which paragraphs (a) and (b) do not apply where the work to which the services relate is performed—
  1. (i)
    by two or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or
  1. (ii)
    where the contractor is a partnership of two or more natural persons, by one or more of the members of the partnership and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or
  1. (iii)
    where the contractor is a natural person, by the contractor and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor, or”
  1. [33]
    The appellants’ evidence before the Commissioner and the primary judge used a numerical shorthand to identify the particular exemptions which applied to the payments which they said they had made.  Although that shorthand identified nine available exemptions, the appellants’ material only asserted the application of one or more of exemptions 1, 2, 4 and 6 to each payment.  As to this:
    1. (i)
      Exemption number 1 was a reference to the exemption stated in s 32(2)(a).
    2. (ii)
      Exemption number 2 was a reference to the exemption stated in s 32(2)(b)(i).
    3. (iii)
      Exemption number 4 was a reference to the exemption stated in s 32(2)(b)(iii).
    4. (iv)
      Exemption number 6 was a reference to the exemption stated in s 32(2)(c).
  2. [34]
    Proof that a payment was within exemption number 1 would require –
    1. (a)
      proof of the contract between the designated person and the other party (in this context the contractor) and under which the payment was made;
    2. (b)
      proof that under the contract the services supplied to the designated person were supplied to the designated person in the course of a business carried on by the designated person;
    3. (c)
      proof that under the contract the designated person was supplied with services for or in relation to the performance of work which were either –
      1. (i)
        ancillary to the supply of goods under the contract by the contractor; or
      2. (ii)
        to the use of goods that were the property of the contractor.
  3. [35]
    Proof that a payment was within exemption number 2 would require –
    1. (a)
      proof of the contract between the designated person and the other party (in this context the contractor) and under which the payment was made;
    2. (b)
      proof that under the contract the services supplied to the designated person were supplied to the designated person in the course of a business carried on by the designated person;
    3. (c)
      proof that under the contract the designated person was supplied with services for or in relation to the performance of work where those services were –
      1. (i)
        of a kind not ordinarily required by the designated person; and
      2. (ii)
        were performed by a person who ordinarily performs services of that kind to the to the public generally.
  4. [36]
    Proof that a payment was within exemption number 4 would require –
    1. (a)
      proof of the contract between the designated person and the other party (in this context the contractor) and under which the payment was made;
    2. (b)
      proof that under the contract the services supplied to the designated person were supplied to the designated person in the course of a business carried on by the designated person;
    3. (c)
      proof that under the contract the designated person was supplied with services for a period that did not exceed 90 days or for periods that in the aggregate did not exceed 90 days in that financial year;
    4. (d)
      proof that the services supplied under the contract were not services –
      1. (i)
        provided by a person by whom similar services were provided to the designated person for periods that, in the aggregate, exceeded 90 days in the relevant financial year; or
      2. (i)
        in relation to the performance of work where any of the persons who performed the work also performed similar work for the designated person for periods that, in the aggregate, exceeded 90 days in the relevant financial year.
  5. [37]
    Proof that a payment was within exemption number 6 would require –
    1. (a)
      proof of the contract between the designated person and the other party (in this context the contractor) and under which the payment was made;
    2. (b)
      proof that under the contract the services supplied to the designated person were supplied to the designated person in the course of a business carried on by the designated person;
    3. (c)
      proof that the contractor supplied the designated person with services for or in relation to the performance of work under a contract to which exemptions number 1 and 2 do not apply; and
    4. (d)
      proof that the work to which the services relate was performed in one of the three ways identified by s 32(2)(c)(i) to (iii).

Analysis

  1. [38]
    As has been mentioned, Mr Crane was a director of the fifth appellant and the sixth appellant.  The appellants relied on two affidavits which had been affirmed by him, one affirmed on 28 June 2016 and one affirmed on 18 March 2019.
  2. [39]
    He exhibited to his first affidavit a number of documents and deposed: “[t]o the best of my knowledge, information and belief, all statements of fact contained in the documents exhibited to this affidavit made by lawyers, my accountants or by me are true.”
  3. [40]
    One exhibited document was a copy of a letter dated 18 September 2015 which Mr Crane wrote to the Commissioner in relation to the 2011, 2012, 2013 and 2014 financial years.  The letter enclosed “our schedules for subcontractors paid during the financial years 2011, 2012, 2013 & 2014 as requested.”  It advised that “these schedules have previously been provided to the NSW Office of State Revenue [(OSR)] and the exemption numbers noted on the schedule correspond to the NSW exemption number system.”  There was a schedule for each financial year under a heading which referred only to the sixth appellant (making no reference to the fifth appellant) and which identified: the name and ABN number of a contractor, subcontractor or consultant; set out a terse description of the services provided; stated what type of entity it was by stating whether it was a private company, a sole trader or was unknown; stated an “exemption number”; and stated an “amount paid”.
  4. [41]
    The form of that information can be exemplified by the following extract of the heading and first three rows of the schedule for the 2011 financial year (i.e. the year ended 30 June 2011), noting that there were 104 rows in all four schedules:

Oakdale Group Pty Ltd

Subcontractors

Financial Year Ended 30 June 2011

Name of contractor, subcontractor or consultant

ABN

Nature of services provided

Type of entity

Exemption number

Amount paid

Purchase: Auswide Pty Ltd

11129527304

Building Contractor

Pty Ltd

6

$51,320.00

Purchase: Cox Stairs

12972243867

Stair Installer

Sole Trader

1 & 2 & 4

$10,533.50

Purchase: David Rawden

80154007720

Tiler

Sole Trader

2, 4 & 6

$9,184.00

  1. [42]
    The following observations may be made about that evidence:
    1. (a)
      It was not apparent from the form of the letter or the schedules that the schedules should be regarded as documents “made by” lawyers, Mr Crane’s accountants or by Mr Crane and therefore the subject of the deposed proposition that “[t]o the best of my knowledge, information and belief, all statements of fact contained in the documents exhibited to this affidavit made by lawyers, my accountants or by me are true.”
    2. (b)
      But even if the schedules were to be so regarded, the schedules could only be taken as some evidence that the sixth appellant (not the fifth appellant) made a particular payment to the identified contractor, subcontractor or consultant for the services specified.  The assertion that a particular exemption number applied in respect of a particular alleged payment could not be regarded as anything other than the assertion of an opinion or a conclusion of law.  It could not be regarded as a statement of fact.
    3. (c)
      When one compares the facts which were arguably proved with the wording of the particular exemption(s) concerned, one can see no basis for being persuaded that the particular payment concerned actually fell within the exemption(s) which the schedule asserted it did.
  2. [43]
    Mr Crane exhibited further documentation to his first affidavit:
    1. (a)
      By letter dated 20 January 2016, and amongst other requests for further information referable to the objections under consideration, the Commissioner invited the provision of further supporting documentation in relation to the “contractor exemptions being claimed in relation to Oakdale Group Pty Ltd.”
    2. (b)
      By letter dated 22 February 2016, the appellants’ lawyers responded by providing what they said was further supporting information on the subject of “contractor exemptions being claimed in relation to [the sixth appellant]”.  The material enclosed further copies of some of the previous schedules and some other information which did not shed any further light on the nature of the payments.  It did include an OSR information sheet which, in context, must be taken to have clarified what parts of s 32(2) of the Payroll Tax Act 2007 (NSW) were intended to be encompassed by the numerical cross-references which had been made in the schedules provided by Mr Crane’s letter of 18 September 2015.
    3. (c)
      By letter dated 1 June 2016, the Commissioner advised of the result of the exclusion applications which had been advanced by the appellants.  Relevant to the present subject matter, the Commissioner wrote (in terms with which the primary judge agreed):

“You submit that none of the payments to contractors are subject to payroll tax.  In support of this, you provided correspondence from the company to the Commissioner which confirmed the exemptions upon which the company is relying.

You were invited to provide further evidence which supported your exemptions, including (but not limited to) correspondence from the Commissioner to Oakdale Group confirming agreement with the exemptions.  In response, you provided a NSW OSR information sheet which explains the exemption criteria.  I do not consider this sufficient confirmation that the payments are not subject to payroll tax.”

  1. [44]
    Mr Crane’s second affidavit contained the same statement concerning the truth of statements of fact contained in exhibited documents made by his lawyers, accountants or himself recorded at [39] above.  Amongst other things, it then affirmed the truth of the following statements:

“Sub-contractors

  1. 21.A letter from Tobin Partners to the OSR dated 14 April 2016 (refer exhibit “DCC83” of my First Affidavit) included a schedule of payments to certain subcontractors by Oakdale Group Pty Ltd ACN 146 634 648 (‘Oakdale Group’) and Oakdale Building Services Pty Ltd ACN 091 173 812 (‘OBS’) (refer “DCC83” at pages 954 to 959).  The schedule used a numbering system to classify those payments with the different types of exemptions numbered in the NSW Revenue Ruling “NSW Payroll Tax Information for Contractors and Employment Agents” (refer “DCC83” at pages 916 to 922) (‘the Subcontractor Exemption Schedule’).
  2. 22.For most of the payments in the Subcontractor Exemption Schedule, if not all, the application of each exemption that was numbered and submitted was self-evident.  Below are some examples of such payments.
  1. 22.1In FY11, Oakdale Group paid Trutek Contractors Pty Ltd $22, 130 for concreting services. Exemption 6 was claimed, being an exemption for payments to contractors who use 2 or more persons to perform the services.  Concreting services require 2 or more persons to perform.
  2. 22.2In FY 11, OBS paid Burnbridge Glass $372 for glass polishing services.  Exemption 4 was claimed, being an exemption for payments for services that do not exceed 90 days in a financial year.  Glass polishing for $372 could not be for a period in excess of 90 days.
  3. 22.3In FY 11, OBS paid Robert Guy & Sons Pty Ltd $558.41 for saw cutting services.  Exemption 4 was claimed.  Saw cutting for $558.41 could not be for a period in excess of 90 days.
  4. 22.4In FY12, Oakdale Group paid Ace Pump Hire Pty Ltd $2,430 for pump hire.  Exemption 4 was claimed and again Pump hire for $2,430 could not be for a period in excess of 90 days.
  5. 22.5In FY13, Oakdale Group paid Bill Murray Aluminium Window & Door Installation $9,547.27 for window and door installation.  Exemption 1 was claimed for this payment, being an exemption where the supply of goods is ancillary to the supply of services.  The installation service was ancillary to the supply of the windows and doors.
  6. 22.6There are a great many more examples.”
  1. [45]
    These paragraphs asserted that the schedules previously provided had identified payments made by both the fifth and sixth appellants.  That contradicted the information previously provided which had suggested they related only to the sixth appellant.  The further material added something to 5 of the 104 payments covered by the schedules, but added nothing but mere further assertion to the evidence in relation to the other 99 payments.  And even in relation to the 5 payments to which something was added, the evidence did not descend to address the particular elements of each of the exemptions with which it dealt sufficiently to permit one to form the view that the payments fell within the exemption, as to which see [34] to [37] above.  In this regard one must recall also that the evidence had to be evaluated in the way described at [29] above, and the power to prove these matters lay with the appellants, not with the Commissioner.
  2. [46]
    The primary judge evaluated the evidence to which I have referred in this way:
    1. (a)
      She concluded that it was not possible to understand from the letter of 18 September 2015, the factual basis for any of the claims asserted in it.
    2. (b)
      She observed in relation to the schedules enclosed with the letter that they added nothing more to the factual basis of the appellants’ argument.
    3. (c)
      She observed that “apart from any questions going to the willingness of either Mr Crane or his accountants to provide proper and honest information to either the Commissioner or the Court”, it simply could not be accepted that merely because one or either of them had made assertions in these schedules that the assertions were correct.
    4. (d)
      She found that the conclusory statements of opinion as to law and fact contained in the schedules could not possibly persuade her of the appellants’ case because they did not allow her to understand the factual basis of the exemptions claimed and did not permit her to test for herself, according to the statutory criteria, whether or not the claims were good.
    5. (e)
      She noted that Mr Crane had provided a little more information in his second affidavit but noted that he did not address the totality of the payments in issue, but only gave a very brief explanation in relation to a few payments.  She concluded that even in relation to those payments, the affidavit fell far short of providing the facts which were necessary to allow her to understand the basis for the payments, and to judge for herself whether or not they fell within any of the exemptions claimed.
  3. [47]
    It will be apparent from the foregoing analysis, that I agree with the views expressed by the primary judge.  I conclude that the primary judge made no error in her assessment of the evidence adduced by the appellants.
  4. [48]
    For completeness, I observe that even if I had been persuaded that there had been some error in fact-finding, and had embarked upon making my own findings of fact on the question, it would have been necessary to confront the issue which the primary judge had not found it necessary to consider (see [46](c) above), namely whether questions going to the willingness of either Mr Crane or his accountants to provide proper and honest information to either the Commissioner or the Court should impact upon that fact finding.  In this regard, I note that the primary judge had, in relation to other aspects of the evidence, criticised the reliability of information provided by and on behalf of Mr Crane.  No attempt was made to suggest that the primary judge’s earlier criticisms were unfounded.  Nor was any attempt made to explain why unreliability identified in other areas would not also necessarily affect adversely an assessment of the reliability of assertions made in relation to contractor payments.
  5. [49]
    The appellants sought both before the primary judge and before this Court to suggest that they should be regarded as having discharged their onus when regard was also had to the contents of correspondence between the Commissioner and the OSR which was exhibited to an affidavit tendered by the Commissioner.  The primary judge had noted that correspondence and observed without further analysis that she could not see that it took the appellants’ case any further.  She was plainly right to take that view of the correspondence, but in deference to the appellants’ argument before this Court, I should explain why in a little more detail.
  6. [50]
    The argument advanced by the appellants before this Court was that it should be inferred from the exhibited correspondence that the OSR must have concluded that the payments concerned fell within the exemptions asserted, and the Commissioner in Queensland was bound as a matter of law by that conclusion.  This argument had no merit for two reasons.
  7. [51]
    First, the correspondence did not demonstrate that the OSR reached any such assessment.  It did not even come close to doing so.  I make the following observations:
    1. (a)
      The schedules which had been identified in the material exhibited to the affidavits of Mr Crane had identified payments to contractors by the sixth appellant for the financial years ended 30 June 2011, 30 June 2012, 30 June 2013 and 30 June 2014.
    2. (b)
      By email dated 11 May 2020, the Commissioner sought information from the OSR.  The email requested copies of NSW assessments from 1 July 2010 to 30 June 2015 in relation to the fifth and sixth appellants.  The email stated that the Commissioner needed to ascertain what the NSW taxable wages were for the fifth and sixth appellants for the periods in question.
    3. (c)
      The response was provided by letter dated 27 May 2020.  The letter communicated that no copies of NSW assessments from 1 July 2010 to 30 June 2015 could be provided for the either the fifth or sixth appellant.  For the fifth appellant, that was because there were no payroll tax assessments issued during that period and its payroll tax registration was cancelled with a liability end date of 22 March 2011.  For the sixth appellant that was because it was registered as a non-lodger for payroll tax with a liability start date of 1 July 2014.
    4. (d)
      The 27 May 2020 letter attached what was described as a 2011 annual return for the fifth appellant.  The annual return appeared to be some form of OSR internal report.  A “Salaries & Wages” field identified some dollar amounts.  A “Contractors Payments” field recorded a zero figure.  The document could have no bearing whatsoever on the payments which were the subject of Mr Crane’s two affidavits.
    5. (e)
      The 27 May 2020 letter stated with respect to the sixth appellant that the single lodger was another company and attached the 2015 annual return for that other company, which the letter said included the wages for the sixth appellant.  Again, that annual return appeared to be some form of internal OSR report.  A “Salaries & Wages” field identified some dollar amounts.  A “Contractors Payments” field recorded a zero figure.   Even if, which I reject, the document could be regarded as some evidence that the OSR’s assessment was that the sixth appellant had made no payments to contractors which should be regarded as taxable wages within the meaning of the Payroll Tax Act 2007 (NSW) because such payments as had been made should be regarded as falling within applicable exemptions under s 32(2) of that Act, it could have no bearing whatsoever on the payments which were the subject of Mr Crane’s two affidavits because it covered the period from 1 July 2014 to 30 June 2015, and the payments referred to in Mr Crane’s two affidavits all pre-dated 1 July 2014.
  8. [52]
    Second, even if the correspondence had demonstrated that the OSR must have made an assessment that the payments concerned fell within the exemptions asserted, there is no provision of the PTA which would make a Queensland Commissioner bound by the conclusion of his or her NSW counterpart.  It is true that the PTA definition of “interstate wages” directs attention to whether payments were not taxable wages within the meaning of the Payroll Tax Act 2007 (NSW) because that Act was the “corresponding law” in this context.  But that is a question to be determined by the Commissioner, and, on appeal, by the primary judge, and, on appeal to this Court, by this Court.  This Court’s attention was not drawn to any statutory provision which would attribute legally binding effect to a decision made by the relevant regulatory authority in another jurisdiction under the relevant corresponding law.

Conclusion

  1. [53]
    The appellants have failed to demonstrate that the primary judge made the error for which they contend.  Ground 5 fails.

Orders

  1. [54]
    All grounds for appeal having failed, the appeal should be dismissed with costs.
  2. [55]
    I record, however, that during the course of its argument, counsel for the appellants had flagged the possibility that the parties would seek an opportunity to advance submissions about the form of the relief given, depending on the outcome.  Mention was made that under s 61A of the TAA, a taxpayer is not entitled to interest should they succeed unless the Court orders, and that an application might be made for such an order.
  3. [56]
    I did not understand the appellants to be seeking an opportunity to be heard as to the form of order which should be made in the event of the appeal being dismissed, or that the Commissioner sought a similar opportunity.  However, in case I am wrong about that, I would give the parties liberty to apply in relation to the form of order, within 4 days of the date of the delivery of this judgment.
  4. [57]
    Accordingly, the orders which should be made are:
  1. 1.The appeal is dismissed, with costs.
  2. 2.The parties have liberty to apply in relation to the form of order, within 4 days of the date of the delivery of this judgment.

Footnotes

[1]  cf Integrated Construction Equipment Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 131 per Senior Member Boxall at [35].

[2]  For a more detailed discussion of the general statutory purpose, see Scott and Bird v Commissioner of State Revenue (2016) 103 ATR 411 per Bond J at 416-418 [21] to [25].

[3]  The terms in which s 32 of the NSW Act expresses the exemptions are substantially the same as the way in which they are expressed in s 13B of the PTA.  The primary judge referred to the latter in her discussion of whether the appellants had proved payments which fell within the statutory exemptions, but that mistake had no bearing on her Honour’s evaluation of the evidence.

Close

Editorial Notes

  • Published Case Name:

    Salemade Pty Limited & Ors v Commissioner of State Revenue

  • Shortened Case Name:

    Salemade Pty Limited v Commissioner of State Revenue

  • MNC:

    [2021] QCA 164

  • Court:

    QCA

  • Judge(s):

    Morrison JA, Mullins JA, Bond JA

  • Date:

    10 Aug 2021

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41
1 citation
Jump To
Cite 1 - [2009] HCA 41
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27
2 citations
Jump To
Cite 1 - (2009) 239 CLR 27
Cite 2 - (2009) 239 CLR 27
Blatch v Archer (1774) 1 Cowp 63
1 citation
Jump To
Cite 1 - (1774) 1 Cowp 63
Blatch v Archer (1774) 98 ER 969
1 citation
Jump To
Cite 1 - (1774) 98 ER 969
East v Bennett Bros Ltd [1911] 1 Ch D 163
2 citations
Jump To
Cite 1 - [1911] 1 Ch D 163
Cite 2 - [1911] 1 Ch D 163
Ho v Powell (2001) 51 NSWLR 572
2 citations
Jump To
Cite 1 - (2001) 51 NSWLR 572
Cite 2 - (2001) 51 NSWLR 572
Ho v Powell [2001] NSWCA 168
1 citation
Jump To
Cite 1 - [2001] NSWCA 168
In the matter of Climbform Australia Pty Limited [2016] NSWSC 1977
1 citation
Jump To
Cite 1 - [2016] NSWSC 1977
Integrated Construction Equipment Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 131
2 citations
Jump To
Cite 1 - [2019] NSWCATAD 131
Cite 2 - [2019] NSWCATAD 131
R v A2 [2019] HCA 35
1 citation
Jump To
Cite 1 - [2019] HCA 35
R v A2 (2019) 93 ALJR 1106
2 citations
Jump To
Cite 1 - (2019) 93 ALJR 1106
Cite 2 - (2019) 93 ALJR 1106
Re Hastings Deering Pty Ltd (1985) 9 ACLR 755
2 citations
Jump To
Cite 1 - (1985) 9 ACLR 755
Cite 2 - (1985) 9 ACLR 755
Salemade Pty Ltd v Commissioner of State Revenue [2021] QSC 19
1 citation
Jump To
Cite 1 - [2021] QSC 19
Scott v Commissioner of State Revenue (2016) 103 ATR 411
1 citation
Jump To
Cite 1 - (2016) 103 ATR 411
Sharpe v Dawes [1876] 2 QBD 26
1 citation
Jump To
Cite 1 - [1876] 2 QBD 26

Cases Citing

Case NameFull CitationFrequency
R v CDV [2025] QCA 1632 citations
1

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