Australia, July 3 -- New South Wales Land and Environment Court issued text of the following judgement on June 3:

1. Before the Tribunal is an application lodged by Nova Security Group Pty Ltd ("Nova") concerning its liability to payroll tax for the financial years ended 30 June 2019 to 30 June 2022 under the Payroll Tax Act 2007 (NSW) ("PTA"). Nova is a private security firm.

2. Nova disputes how the Chief Commissioner of State Revenue ("Chief Commissioner") has determined to characterise the security services Nova provides to its clients for payroll tax purposes. In the financial years ended 30 June 2019, 30 June 2020 and 30 June 2022 ("relevant years"), Nova provided security services at licensed venues such as pubs and clubs, and supplied guards to other security firms for larger events such as rugby games. It used subcontractors to provide the services.

3. The principal issue in dispute is whether the arrangements between Nova, its clients and third-party labour hire companies used by Nova are "employment agency contracts" as defined in s 37 of the PTA.

4. The Chief Commissioner determined that Nova's services occurred "in and for" its clients' businesses. Under Part 3 Division 8 of the PTA, the Chief Commissioner determined that this made Nova an "employment agent" liable to payroll tax on payments it made to subcontractors in the relevant years. The Chief Commissioner issued payroll tax assessments to Nova on that basis ("assessments").

5. Nova disputes this determination and seeks review under s 96 of the Taxation Administration Act 1996 (NSW) ("TAA"). Nova contends that it does not procure the services of the security guards from third party labour hire companies "in and for the conduct of the business of its clients, as explained in UNSW Global Pty Ltd v Chief Commissioner of State Revenue (2016) 104 ATR 577 at 593 [62] ("UNSW Global").

6. The Chief Commissioner contends that the assessments should be confirmed. The Chief Commissioner asserts that while Nova's contracts with its clients must be examined individually, characterising security services as not "in and for" a client's business "is suggestive of error" - Chief Commissioner of State Revenue v Integrated Trolley Management Pty Ltd [2023] NSWCA 302 ("ITM Appeal"), [54] (Basten AJA). The Chief Commissioner contends this follows from the close relationship between security services and the ordinary conduct of the client's business: the services attach to the clients' premise; customers and staff; they help fulfil the client's liquor licence obligations; they are regularly required; and they implement the client's policies. The security licensing framework and Nova's contracts do not suggest otherwise.

7.The resolution of this dispute will determine whether Nova is liable to pay payroll tax in respect of amounts that relate to the labour of security guards provided by third-party labour hire companies to it.

8. Nova also contends there is a dispute about double taxation concerning on-hire guards and whether penalties and interest should be remitted and, if so, whether in whole or in part.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1972dca6449da93ba749a634)

Disclaimer: Curated by HT Syndication.