Payroll tax grouping for discretionary trusts (NSW)

In Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Ltd [2017] NSWCA 184, the Supreme Court of New South Wales – Court of Appeal (Court of Appeal) set aside an earlier decision of the Supreme Court in a case concerning the application of payroll tax grouping provisions to discretionary trusts. In the previous decision, the Supreme Court held that relevant entities were not part of a group for payroll tax purposes as a beneficiary of the discretionary trusts in question had retrospectively disclaimed their interest in the trusts. Therefore, the companies were found to no longer be under common control.

The Court of Appeal held that:

  • The existence and composition of the payroll tax group was to be made by reference to the legal relationships that existed at the time the liability to payroll tax arose.
  • The disclaimer could not retrospectively alter the joint and several liability of the group members at the time the payroll tax liability arose, as it was not in place at the date the liability to payroll tax arose under the Payroll Tax Act 2007 (NSW) (seven days after the end of the relevant months or 21 days after the end of the relevant financial years).

As such, the relevant entities were found to be part of a payroll tax group, and each member of the group was jointly and severally liable for the payroll tax liabilities of other members of the group.

Change to the ATO’s practical compliance approach for superannuation guarantee

The Australian Taxation Office (ATO) has recently updated its online guidance for employers in relation to underpayments of superannuation guarantee (SG) to employees. Under the changes, employers with a good compliance history will no longer be able to resolve any SG underpayments by making late payments directly into employee superannuation fund accounts. Instead, all employers will need to engage with the ATO and complete a Superannuation Guarantee Charge (SGC) Statement in relation to any SG underpayments that are identified.

Superannuation guarantee health checklist

The ATO is seeking feedback on the superannuation guarantee (SG) health checklist, which outlines essential questions employers need to answer when meeting their superannuation obligations. Feedback can be provided via the ATO’s Let’s Talk website.

PwC submission on ATO’s draft ruling on travel expenses

PwC has made a submission in relation to draft ruling TR 2017/D6, which provides the Commissioner of Taxation's preliminary view of when employees’ travel expenses are, or would otherwise be, deductible for income tax and ‘otherwise deductible’ for Fringe Benefit Tax (FBT) purposes. Our submission acknowledges that, although TR 2017/D6 provides a range of modern day examples, there are a number of areas where further guidance would provide greater clarity regarding tax treatment for the travel expenses of employees, especially for mobile employees. For further insight into the ATO’s draft ruling, refer to PwC Australia’s TaxTalk Alert.

Setting the record straight on Single Touch Payroll

The ATO has released additional commentary in response to media coverage about the implementation of Single Touch Payroll. The commentary relates to proposed changes to the process where an employee starts a job.

Director Penalty Notices for underpaid employee obligations

In Deputy Commissioner of Taxation v Arora [2017] NSWSC 1016, the Supreme Court of NSW (the Court) found for the Commissioner and upheld Director Penalty Notices issued for penalties relating to underpaid PAYG Withholding and Superannuation Guarantee Charges. The Court ruled the defendant failed to substantiate any of the defences available in s269-35 of Schedule 1 of the Taxation Administration Act 1953. The taxpayer had raised a number of possible defences including illness, and the expectation that the outstanding employee obligations would be met through either the liquidation of the company or by the purchaser of the businesses. However, the Court ultimately found these defences did not impact the application of the Director Penalty Notice provisions to the Director.