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Xede Pty Ltd v Commissioner of State Revenue[2018] QCAT 362

Xede Pty Ltd v Commissioner of State Revenue[2018] QCAT 362

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Xede Pty Ltd & Ors v Commissioner of State Revenue [2018] QCAT 362

PARTIES:

XEDE PTY LTD, CODE BOWEN HILLS PTY LTD, CHROME AP NO 1 PTY LTD, CHROME PROPERTIES PTY LTD, CHROME PROPERTY GROUP PTY LTD, PCT PTY LTD, RJF PROPERTY GROUP PTY LTD, DF INTERIORS PTY LTD, FFT ASSETS PTY LTD AS TRUSTEE FOR THE FIDLER FAMILY TRUST, TACOMA CONTRACTING GROUP PTY LTD, MOOOLOOLABA PLUMBING WORKS PTY LTD, TACOMA PLUMBING SEQ PTY LTD, TACOMA PLUMBING AND DRAINAGE PTY LTD AND AP HOTEL 1 PTY LTD

(applicants)

v

COMMISSIONER OF STATE REVENUE

(respondent)

APPLICATION NO/S:

GAR094-18; GAR096-18; GAR106-18; GAR107-18

MATTER TYPE:

General administrative review matters

DELIVERED ON:

30 October 2018

HEARING DATE:

22 October 2018

HEARD AT:

Brisbane

DECISION OF:

Member Cranwell

ORDERS:

  1. The answer to the second preliminary question is “no”.
  2. The application for an interim order filed on 7 September 2018 is otherwise dismissed.

CATCHWORDS:

TAXES AND DUTIES – PAYROLL TAX – LIABILITY TO TAXATION – GROUPING OF EMPLOYERS – where application made for an exclusion order – whether exclusion order can create sub-groups

Payroll Tax Act 1971 (Qld), s 68, s 73, s 74

Payroll Tax (Harmonisation) Amendment Act 2008 (Qld)

Taxation Administration Act 2001 (Qld), s 71

A L Builders Pty Ltd v Fatseas & Anor [2014] QCATA 171

CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601

Commissioner of Payroll Tax (Qld) v John French Pty Ltd & Ors (1983) 83 ATC 4283

Mead Packaging (Aust) Pty Ltd v Commissioner of Payroll Tax (NSW) (1978) 78 ATC 4164

Port Augusta Medical Centre Pty Ltd v Commissioner of State Taxation [2012] SASCFC 7

Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495

Scott and Bird & Ors v Commissioner of State Revenue [2016] QSC 132

APPEARANCES & REPRESENTATION:

 

Applicant:

S Lancaster, solicitor of Cooper Grace Ward Lawyers

Respondent:

H Lakis, instructed by Clayton Utz

REASONS FOR DECISION

The applicants

  1. [1]
    On 15 May 2018, Acting Senior Member Browne directed that the applications for GAR094-18, GAR096-18, GAR106-18 and GAR107-18 be heard together.
  2. [2]
    The applicants in GAR094-18 are:
    1. (a)
      Xede Pty Ltd;
    2. (b)
      Code Bowen Hills Pty Ltd;
    3. (c)
      Chrome AP No 1 Pty Ltd;
    4. (d)
      Chrome Properties Pty Ltd;
    5. (e)
      Chrome Property Group Pty Ltd; and
    6. (f)
      PCT Pty Ltd.
  3. [3]
    This group of applicants is described as the Chrome Group.
  4. [4]
    The applicants in GAR096-18 are:
    1. (a)
      RFJ Property Group Pty Ltd;
    2. (b)
      DF Interiors Pty Ltd; and
    3. (c)
      FFT Assets Pty Ltd as trustee for the Fidler Family Trust.
  5. [5]
    This group of applicants is described as the Fidler Family Group.
  6. [6]
    The applicants in GAR107-18 are:
    1. (a)
      Tacoma Contracting Group Pty Ltd;
    2. (b)
      Mooloolaba Plumbing Works Pty Ltd;
    3. (c)
      Tacoma Plumbing SEQ Pty Ltd; and
    4. (d)
      Tacoma Plumbing and Drainage Pty Ltd.
  7. [7]
    This group of applicants is described as the Tacoma Group.
  8. [8]
    The applicant in GAR106-18 is AP Hotel 1 Pty Ltd. This applicant is described as AP Hotel 1.

The decision under review

  1. [9]
    The Tribunal is reviewing a decision made by the Commissioner of State Revenue (the Commissioner) made on 18 January 2018, disallowing the applicants’ objection to a decision made on 10 April 2017.
  2. [10]
    In summary, the applicants had applied for exclusion orders that would have had the effect of creating four separate groups for payroll tax purposes, namely the Chrome Group, the Fidler Family Group, the Tacoma Group and AP Hotel 1. The Commissioner refused the applicants’ application for exclusion orders.
  3. [11]
    Relevantly, in relation to GAR107-18, the effect of the Commissioner’s decision was to refuse to make an exclusion order excluding each member of the Tacoma Group from each of:
    1. (a)
      the Chrome Group;
    2. (b)
      the Fiddler Family Group; and
    3. (c)
      AP Hotel 1,

but not from other members of the Tacoma Group.

The preliminary questions

  1. [12]
    On 22 August 2018, Member Allen directed that the parties must file any consent application for the determination of a preliminary question by 5 September 2018.
  2. [13]
    On 7 September 2018, an application for an interim order was filed with the Tribunal seeking determination of preliminary questions. Two questions were posed based on the following agreed facts:
  1. The fourteen Applicants in GAR 094-18, GAR 096-18, GAR 106-18 and GAR 107-18 are members of a payroll tax group pursuant to Part 4 of the Payroll Tax Act 1971 (Qld) (Act).
  2. In accordance with a power conferred in section 74 of the Act, the Respondent has a discretion, by order in writing, to exclude a person from a group.
  3. In exercising its review jurisdiction in accordance with section 24 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld), the Tribunal has the power to direct the Commissioner to issue an exclusion order under section 74 of the Act.
  1. [14]
    The two questions posed were:

1. In respect of the applications filed in GAR094-18, GAR096-18, GAR106-18 and GAR107-18:

  1. (a)
    when reviewing the Objection Decision dated 18 January 2018, is the Tribunal required to consider the terms of the application for exclusion as made in:
  1. (i)
    the application dated 20 October 2016; and/or
  2. (ii)
    the applications dated 30 November 2016; and/or
  3. (iii)
    the Objection dated 9 June 2017.

2. In respect of the application filed in GAR107-18:

  1. (a)
    Does section 74(2) of the Act give the Respondent the power to issue exclusion orders excluding each of the four Applicants in GAR107-18 from:
  1. (i)
    the sole Applicant in GAR106-18;
  2. (ii)
    each of the six Applicants in GAR094-18; and
  3. (iii)
    each of the three Applicants in GAR096-18,

but not excluding the four Applicants in GAR107-18 from each other, such that they remain in a separate payroll tax group.

  1. [15]
    The Tribunal’s power to determine a preliminary question is ‘discretionary and it depend[s] on the particular circumstances of the case’.[1]
  2. [16]
    One of the factors to be taken into account in considering whether to determine a preliminary question is whether the procedure will ‘contribute to the saving of time and costs’.[2]
  3. [17]
    At the hearing, I noted that s 71(3)(a) of the Taxation Administration Act 2001 (Qld) (‘the TA Act’) provides that the Tribunal must:

hear and decide the review of the decision by way of a reconsideration of the evidence before the commissioner when the decision was made, unless QCAT considers it necessary in the interests of justice to allow new evidence …

  1. [18]
    Given that no application had been filed to allow new evidence, I asked the parties’ representatives for an estimate of the length of the hearing if the preliminary questions were not answered. I was told the hearing would likely go for one day. I then asked the parties’ representatives for an estimate of the length of the hearing if the preliminary questions were answered. I was told the hearing would likely go for one day.
  2. [19]
    It therefore appears that the determination of the preliminary questions will result in little or no saving of hearing time.
  3. [20]
    Further, in relation to the first question, the applicants flagged in written submissions that one of the potential answers to this question would give rise to an application to amend the grounds of objection.[3] I note in passing that s 71(2) of the TA Act provides:

The grounds on which the application for review is made are limited to the grounds of the relevant objection, unless QCAT otherwise orders.

  1. [21]
    In CBS Productions Pty Ltd v O'Neill, Kirby P (as he then was) stated:[4]

Care must also be taken in utilising the procedures now available for the determination of preliminary points to avoid such determination in cases which are not ripe for this treatment. A matter is “ripe” for separate and preliminary determination where it is a central issue in contention between the parties, the resolution of which will either obviate the necessity of litigation altogether or substantially narrow the field of controversy. Thus, where a plaintiff sues contending breach by the defendant of his duty to the plaintiff as an invitee, determination of this issue as a preliminary point would rarely, if ever, be appropriate if the plaintiff had in reserve, alternative counts framed in the duty owed to a licensee or an entrant as of contractual right or in negligence generally. To determine the one matter would leave other issues unresolved and render the preliminary procedure a needless and expensive fatuity.

  1. [22]
    In my view, the first question is not “ripe” for separate and preliminary determination. If one of the potential answers to the question would lead to an application to amend the grounds of objection, then the determination of the preliminary question is at risk of becoming ‘a needless and expensive fatuity’.
  2. [23]
    In these circumstances, I decline to answer the first question.
  3. [24]
    While I have concerns about the utility determining the second question where doing so will not result in any saving of time, the parties arrived at the hearing ready to argue the matter before me and had obviously expended some resources to get to that point. I will reluctantly proceed to answer the second question. I do so only because the application for an interim order appears to have arisen out of a direction made by the Tribunal on 22 August 2018. I would otherwise have declined to answer both questions.

Answer to the second question

  1. [25]
    Part 4 of the Payroll Tax Act 1971 (Qld) (‘the PT Act’) is headed ‘Grouping provisions’. In Scott and Bird & Ors v Commissioner of State Revenue, Bond J observed:[5]

That material suggests that:

  1. (a)
    the grouping provisions were aimed at a particular mischief namely the tax avoidance which might occur if employers split their payroll over several entities each claiming the (now $1.1 million) deduction/threshold;
  2. (b)
    in order to ensure that purpose was achieved, the grouping provisions were expressed in broad language; and
  3. (c)
    the purpose of conferring on the Commissioner a discretion to make an exclusion order was to enable the Commissioner to grant relief against the inappropriate operation of the broadly expressed grouping provisions.
  1. [26]
    Sections 68 and 73 address the composition of groups. Section 68 is headed “’Constitution of groups’ and states:

A group is constituted by all persons forming a group that is not part of a larger group.

  1. [27]
    Section 73 is headed ‘Smaller groups subsumed into larger groups’. Subsection (1) states:

If a person is a member of 2 or more groups, the members of all the groups together constitute a group.

  1. [28]
    These provisions made it clear that there cannot be smaller groups within a larger group. It is only the larger group which constitutes the group.
  2. [29]
    The agreed facts set out above indicate that there is one group of 14 members in the present case.
  3. [30]
    Section 74 is headed ‘Exclusion of persons from groups’. Subsections (1) and (2) state:
  1. (1)
    The commissioner may, by order in writing (an exclusion order), exclude a person from a group.
  2. (2)
    The commissioner may make an exclusion order only if the commissioner is satisfied 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.

[underlining added]

  1. [31]
    In my view, the plain meaning of s 74 is that:
    1. (a)
      Section 74(1) provides the Commissioner’s discretionary power to make an individual exclusion order relates to a single member of a group.
    2. (b)
      Section 74(2) then requires that the single member referred to in subsection (1) satisfy the Commissioner that it has no dependency or connection with any other member of the group.
  2. [32]
    Applying this construction s 74(2) to the present case, a single applicant for an exclusion order must demonstrate that it meets the exclusion criteria in respect of the other 13 members of the group.
  3. [33]
    This issue was considered by the Full Court of the Supreme Court of Queensland in Commissioner of Payroll Tax (Qld) v John French Pty Ltd & Ors (the John French case).[6] The legislation under consideration in that case was materially identical to that set out above.
  4. [34]
    Section 16E of the PT Act, as considered in the John French case, stated:
  1. (1)
    Notwithstanding any other provision of this part (except subsection (2)), where a person is whether or not by virtue of this subsection a member of 2 or more groups (each of which is in subsection (2) referred to as a smaller group), all of the members of those groups constitute, for the purposes of this Act, one group.
  2. (2)
    Except for the purpose of determining whether a group is constituted under subsection (1), a group which, but for this subsection, would be a smaller group, ceases to be a group if its members are members of a group constituted under subsection (1).
  1. [35]
    Section 16H(1) stated:

Where the Commissioner is satisfied, having regard to the nature and degree of ownership or control of the businesses, the nature of the businesses and any other matter he considers relevant, that a business carried on by a member of the group is carried on substantially independently of and is not substantially connected with the carrying on of a business carried on by any other member of that group, the Commissioner may be order in writing served on that first mentioned member, exclude him from that group.

[underlining added]

  1. [36]
    McPherson J (as he then was), with Campbell CJ agreeing, quoted with approval the New South Wales Supreme Court decision in Mead Packaging (Aust) Pty Ltd v Commissioner of Payroll Tax (NSW):[7]

Where, as here, there are three members of the group, one of them will not be entitled to exclusion by an order under the sub-section unless the requisite satisfaction is had in respect of each of the other members of the group.

  1. [37]
    This does no more than apply the plain meaning of the provisions which I arrived at above. Even if I had adopted a different construction of the provisions, I would have been bound by the Full Court’s decision in any event.
  2. [38]
    I note that the same conclusion was reached by the Full Court of the Supreme Court of South Australia in Port Augusta Medical Centre Pty Ltd v Commissioner of State Taxation[8] in respect of materially identical provisions.
  3. [39]
    I further note that the PT Act was amended in 1984 in response to the John French case, resulting in the insertion of s 16E(3):

Where the commissioner is satisfied, having regard to any matters that the commissioner considers relevant, that it would be just and reasonable to include as members of one group the members of 2 or more groups, the commissioner may, by order in writing served on the person or persons who are members of those groups, exclude them from that one group.

  1. [40]
    This provision was re-enacted with substantially the same effect as s 71 from 1 July 2005, before being repealed with effect from 1 July 2008 by the Payroll Tax (Harmonisation) Amendment Act 2008 (Qld).
  2. [41]
    The construction contended by the applicants would effectively require the addition to s 74(2) of the words ‘that they seek to be excluded from’,[9] so that the section would read:

The commissioner may make an exclusion order only if the commissioner is satisfied 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 that they seek to be excluded from.

[underlining added]

  1. [42]
    The provision simply does not contain those words, or words to that effect, and the provisions which would have facilitated the outcome sought by the applicants have been repealed.
  2. [43]
    The applicants sought to distinguish the John French case on the basis that there were multiple co-applicants for exclusion in the present case. While all members of the Tacoma Group did make an application for exclusion orders on the same form, the construction of s 74(1) which I have adopted permits each exclusion order to be made in respect of an individual member of the group. Each member of the group must still demonstrate that it meets the exclusion criteria with respect to all 13 other members of the group. There is therefore no basis to distinguish the John French case.
  3. [44]
    The answer to the second preliminary question is ‘no’.

Footnotes

[1] A L Builders Pty Ltd v Fatseas & Anor [2014] QCATA 171, [12].

[2] Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495, [8].

[3] Applicant’s written submissions filed on 14 September 2018, [38]-[57].

[4] (1985) 1 NSWLR 601, 606.

[5] [2016] QSC 132, [24].

[6] (1983) 83 ATC 4283.

[7] (1978) 78 ATC 4164, 4172 (Rath J).

[8] [2012] SASCFC 7, [96] and [111] (Kourakis J), [70] (Anderson J, Kelly J agreeing).

[9] Applicant’s written submissions filed on 14 September 2018, [85(b)].

Close

Editorial Notes

  • Published Case Name:

    Xede Pty Ltd & Ors v Commissioner of State Revenue

  • Shortened Case Name:

    Xede Pty Ltd v Commissioner of State Revenue

  • MNC:

    [2018] QCAT 362

  • Court:

    QCAT

  • Judge(s):

    Member Cranwell

  • Date:

    30 Oct 2018

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
A L Builders Pty Ltd v Fatseas & Anor [2014] QCATA 171
2 citations
Jump To
Cite 1 - [2014] QCATA 171
Cite 2 - [2014] QCATA 171
CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601
2 citations
Jump To
Cite 1 - (1985) 1 NSWLR 601
Cite 2 - (1985) 1 NSWLR 601
Commissioner of Payroll Tax (Qld) v John French Pty Ltd & Ors (1983) 83 ATC 4283
2 citations
Jump To
Cite 1 - (1983) 83 ATC 4283
Cite 2 - (1983) 83 ATC 4283
Port Augusta Medical Centre Pty Ltd v Commissioner of State Taxation [2012] SASCFC 7
2 citations
Jump To
Cite 1 - [2012] SASCFC 7
Cite 2 - [2012] SASCFC 7
Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495
2 citations
Jump To
Cite 1 - (1999) 217 ALR 495
Cite 2 - (1999) 217 ALR 495
Scott v Commissioner of State Revenue [2016] QSC 132
2 citations
Jump To
Cite 1 - [2016] QSC 132
Cite 2 - [2016] QSC 132
Seovic Civil Engineering Pty Ltd & Ors v Chief Commissioner (1978) 78 ATC 4,164
2 citations
Jump To
Cite 1 - (1978) 78 ATC 4,164
Cite 2 - (1978) 78 ATC 4,164

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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