ATO’s discussion paper on definition of taxi
The Australian Taxation Office (ATO) is reviewing the definition of ‘taxi’ contained in the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBT Act), and has released a discussion paper: TDP 2017/2: Definition of taxi for FBT purposes. The paper has been released in light of the recent Federal Court decision in Uber B.V. v Commissioner of Taxation  FCA 110, and the rise in popularity of ride-sourcing services as an alternative to traditional taxi services.
The discussion paper outlines the ATO’s proposed change of interpretation in relation to the definition of ‘taxi’ contained within the FBT Act, and its application to the s58Z FBT exemption for taxi travel undertaken to or from work, or due to illness.
The Pay-roll Tax Amendment (Debt and Deficit Remediation) Bill 2017 and Pay-roll Tax Assessment Amendment (Debt and Deficit Remediation) Bill 2017 were introduced into the Western Australia (WA) Legislative Assembly during October. Following the recent 2017-18 WA State Budget announcement, these Bills propose to amend the Pay-roll Tax Act 2002 and Pay-roll Tax Assessment Act 2002 to temporarily introduce a progressive increase in the payroll tax rate in Western Australia for five years from 1 July 2018, for employers paying annual taxable wages in excess of AUD100 million.
The Supreme Court of NSW in JP Property Services Pty Limited v Chief Commissioner of State Revenue  NSWSC 1391 has held that payroll tax was not payable on payments made to subcontractors as the relevant contracts were not ‘employment agency contracts’ as defined in subsection 37(1) of the Payroll Tax Act 2007 (NSW).
JP Property Services Pty Limited (JP) provided cleaning and property maintenance services to commercial and industrial clients, including supermarkets operated by Franklins as well as other privately owned hotels and childcare centres. In providing those services, JP used a combination of both its own employees and third party subcontractors (both natural persons and corporations). While the Chief Commissioner of State Revenue was of the view that the subcontractor arrangements constituted employment agency contracts on the basis that JP procured the services of a service provider for its client and were therefore subject to payroll tax, this was ultimately overturned by the Supreme Court after applying precedent established in last year’s UNSW Global case.
The services provided by JP and its subcontractors were solely outside the hours when the stores were open to the public, which resulted in the Court finding that the services of the subcontractors were not procured in or for the conduct of the client’s business. Importantly, Justice Kunc stated that if the cleaning services were instead provided during the hours the stores were open to sell goods to the public (for example, responding to a spill in a grocery aisle), the services would have been considered by the Court to be in or for the conduct of the client’s business, and would constitute an employment agency contract.
ATO issues Draft Employee Termination Instrument
The ATO has issued SPR 2017/D3 – Draft Income Tax Employment Termination Payments (12 month rule) Determination 2017, which extends the definition of employment termination payment to include certain payments received more than 12 months after the termination of a person’s employment, where the delay was either the result of liquidator, receiver or trustee in bankruptcy having been appointed (appointment must be no later than 12 months after the termination of employment), or due to legal action concerning:
●the person’s entitlement to the payment; or
The Supreme Court of QLD, Court of Appeal (the Court), in Brisbane Bears – Fitzroy Football Club Limited v Commissioner of State Revenue  QCA 223 has dismissed the taxpayer’s appeal and upheld the decision of the Supreme Court of QLD.
The Court found that payments made by the taxpayer to various players and coaches (or their associated corporate entities) were not solely for image rights, but for marketing and promotional services performed or rendered. This decision was reached on the basis that there was insufficient evidence for the Court to establish that payments made by the appellant, for the use of image rights, were made other than in the course of the provision of services, or independently from the provision of promotional or marketing services by the players and coaches.
The Court held that the payments made were ‘wages’ and ‘taxable wages’ as defined in the Payroll Tax Act 1971 (Qld), and as such they were liable to payroll tax.
Garnishee notices ruled invalid on grounds of procedural fairness (ACT)
In Canberra Cleaner Pty Ltd v Commissioner for ACT Revenue (No. 2)  ACTSC 303, the ACT Supreme Court ordered that garnishee notices issued by the Commissioner in respect of unpaid payroll tax liabilities be set aside.
The Court found that the taxpayer receiving the garnishee notice had not previously been identified on the notice of assessment for the payroll tax liability in question. While this was attributed to an administrative error by the Commissioner, in issuing a garnishee notice based on a notice of assessment issued to a group that did not specifically include the taxpayer, there was a denial of procedural fairness which resulted in the garnishee notices being found to be invalid to the extent they were issued to this taxpayer.