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Commissioner of State Revenue v The Optical Superstore Pty Ltd [2018] VSC 524 (21 September 2018)

Last Updated: 21 September 2018

AT MELBOURNE

COMMERCIAL COURT

TAXATION LIST

S ECI 2018 00044

S ECI 2018 00045

S ECI 2018 00046

S ECI 2018 00047

S ECI 2018 00048

S ECI 2018 00049

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PRACTICE AND PROCEDURE – Victorian Civil and Administrative Tribunal – Appeal against Tribunal orders – Victorian Civil and Administrative Tribunal Act 1998 s 148(1)

TAXATION AND REVENUE – Liability of deemed employer for payroll tax for distributions under an express trust to a deemed employee – Where optometrists directed consultation fees be paid to store owner to be held on trust for the optometrist – Where net consultation fees returned to the optometrists reflected hours worked rather than fees earned – Whether return of trust moneys were payments “for or in relation to the performance of work” – Murdoch v The Commissioner of Pay-Roll Tax (Vic) [1980] HCA 33; (1980) 143 CLR 629 – Newcastle Club Ltd v Commissioner of Taxation (1994) 53 FCR 1 – Payroll Tax Act 2007 s 35(1) – Pay-Roll Tax Act 1971 s 3C(2)(c)

WORDS AND PHRASES – “Paid or payable” – Whether a sum returned under an express trust could be “paid or payable” within the meaning of payroll tax legislation.

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HIS HONOUR:

Introduction

1 By his originating process of 2 March 2018, the Commissioner of State Revenue (“the Commissioner”) seeks both leave to appeal and to appeal from the orders of the Victorian Civil and Administrative Tribunal (“the Tribunal”) under s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”).^[1] Pursuant to these orders, the Commissioner’s assessment of the payroll tax liabilities of various entities which operate optical dispensary stores under the name of The Optical Superstore (“the Taxpayers”) was varied for the 2006 to 2011 financial years. The Taxpayers, who are the respondents to this appeal, resist both the Commissioner’s leave application and the appeal itself.

2 The principal issue in this appeal is whether the Tribunal misconstrued the words “amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract” in s 3C(2)(c) of the Pay-Roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007 when the Tribunal concluded that the return of moneys held on express trust could not be “a payment for or in relation to the services provided to [the Taxpayers]”.^[2] For the reasons which follow, I am of the view that the orders made by the Tribunal ought to be upheld.

3 In the interests of expedition and economy in terms of time and cost, this proceeding was heard as a combined or “rolled up”^[3] application for leave to appeal the Tribunal’s decision and, if leave were to be granted, the hearing of the appeal itself. In pursuit of the same interests, the related proceedings—there being a separate proceeding for each financial year as an individual determination was made by the Commissioner in respect of each financial year^[4]—were joined and heard together.^[5]

Principles applicable with respect to appeal

4 Section 148(1) of the VCAT Act provides:

A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding—

(a) if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or

(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.

It follows from this provision that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law, and secondly, that the Court gives leave to appeal. The legislative policy underlying these provisions is that “VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal.”^[6]

5 The leave requirement under s 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:^[7]

The requirement for leave under s 148(1) of the VCAT Act “is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal”.^[8] It also confers a discretion about whether to grant leave^[9] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.^[10] It will ordinarily be necessary (in addition to a clearly articulated question of law)^[11] for an applicant to make out a prima facie case^[12] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.^[13]

6 In considering an application of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission said:^[14]

Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.^[15] The focus of attention is on the substance of the decision and whether it has addressed the “real issue” presented by the contest between the parties.

Factual matters

7 Neither party challenges any of the factual findings of the Tribunal,^[16] and so while the relevant facts will be summarised to the extent that they are relevant to the appeal, greater detail can be found in the Tribunal’s Reasons.^[17] The Optical Superstore Pty Ltd (“the Trustee”) is the trustee of four related trusts which together carry on an optical dispensary business known as “The Optical Superstore”. The stores operated under the “The Optical Super Store” name (“the TOSS Stores”) are either owned by the Trustee (in its capacity as trustee of the First Respondent) or are licensed by the Trustee (in its capacity as the trustee of either the Third or Fourth Respondents) to other parties (“Licensees”). Throughout the period from 1 July 2005 to 30 June 2011, the Trustee, and also the Licensees and the trustees of the Ninth and Tenth Respondents, entered into contracts either directly with optometrists or with the companies or trusts through which the optometrists operated their respective businesses (collectively, “the Optometrist Entities”) in relation to the provision of optometry services at the TOSS Stores (“the Optom Agreements”).

8 No distinction was sought to be made between the various Optom Agreements so the following analysis is directed to the Optom Agreements entered into by the Trustee, though it applies mutatis mutandis to the other Optom Agreements. Moreover, the parties agreed that there was no material difference between the provisions of the Pay-Roll Tax Act 1971 and the Payroll Tax Act 2007 (“the PTA”),^[18] the former applying only in the 2005/2006 and 2006/2007 financial years before the latter came into force. On this basis, the following analysis is directed to the PTA but applies equally to the Pay-Roll Tax Act 1971.

9 The Optom Agreements established a rather odd regime by which the Optometrist Entities ultimately received money based on the number of hours the particular optometrist worked at the TOSS Stores, though this money was—for the most part—not paid to them by the Trustee out of the Trustee’s own funds. Instead, the Optometrist Entities were required to ensure that their “Consultation Fees”—being both the money earned from bulk billing to Medicare and the money paid by patients directly—were paid to the Trustee directly who would hold that money on trust for the relevant Optometrist Entity. This arrangement was established to obviate the need for the Trustee to hold a premises security deposit. Further, each Optometrist Entity was liable to pay the Trustee an “Occupancy Fee” for the use of the Trustee’s premises, which was calculated as the total Consultation Fees for a particular period less the “Reimbursement Amount”. The Reimbursement Amount was calculated by multiplying the number of hours the optometrist was available to see patients at the TOSS Store in that period by the applicable hourly rate.

10 Importantly, this formula meant that the Reimbursement Amount was not affected by either the number of patients actually seen by the relevant optometrist or the Consultation Fees earned by that optometrist. At the end of each month, the optometrist would submit the number of hours worked and once these were approved, the Reimbursement Amount for that month would be calculated and then distributed to the relevant Optometrist Entity from—subject to an exception to be discussed shortly—the Consultation Fees held on trust. The remaining Consultation Fees would then be retained by the Trustee as the “Occupancy Fee”.

11 The Reimbursement Amounts a particular Optometrist Entity received could, and often did, exceed the Consultation Fees earned by that Optometrist Entity, meaning that no Occupancy Fee was paid or payable to the Trustee. The Optom Agreements provided that the amount by which the Reimbursement Amount exceeded the gross Consultation Fees would be paid to the Optometrist Entity from the Trustee’s own funds, and these excess payments were referred to as “Location Attendance Premiums”. However, in practice, the Location Attendance Premiums paid by the Trustee were treated as “loans” made by the Trustee to the Optometrist Entity, though these “loans” could only be recovered from the Consultation Fees net of the Reimbursement Amount for months in the same financial year. Only if excess “loans” remained outstanding at the end of the financial year were they re-characterised as payments from the Trustee to the Optometrist Entity—the Location Attendance Premiums—and invoiced accordingly.

Relevant legislation

12 Although the issues before this Court are narrow, it is helpful to set out the provisions of the PTA which are said to establish the liability of the Taxpayers to payroll tax. Generally, payroll tax must be paid on wages and other payments which are taken to be wages under the PTA:

6 Imposition of payroll tax

Payroll tax is imposed on all taxable wages.

7 Who is liable for payroll tax?

The employer by whom taxable wages are paid or payable is liable to pay payroll tax on the wages.

...

10 What are taxable wages?

(1) For the purposes of this Act, taxable wages are wages that are taxable in this jurisdiction.

(2) However, exempt wages are not taxable wages.

...

13 What are wages?

(1) For the purposes of this Act, wages mean wages, remuneration, salary, commission, bonuses or allowances paid or payable to an employee, including—

...

(e) an amount that is included as or taken to be wages by any other provision of this Act.

13 The PTA also provides that amounts paid or payable by a deemed employer to a deemed employee for or in relation to the performance of work under certain contracts are taken to be wages:

32 What is a relevant contract?

(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—

(a) supplies to another person services for or in relation to the performance of work; or

(b) has supplied to the designated person the services of persons for or in relation to the performance of work; or

...

(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—

...

(b) is supplied with services for or in relation to the performance of work where—

(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

(ii) those services are of a kind ordinarily required by the designated person for less than 180 days in a financial year; or

...

33 Persons taken to be employers

(1) For the purposes of this Act, a person—

(a) who during a financial year, under a relevant contract, supplies services to another person; or

(b) to whom during a financial year, under a relevant contract, the services of persons are supplied for or in relation to the performance of work; or

...

is taken to be an employer in respect of that financial year.

(2) If a contract is a relevant contract under both section 32(1)(a) and (b)—

(a) the person to whom, under the contract, the services of persons are supplied for or in relation to the performance of work is taken to be an employer; and

(b) despite subsection (1)(a), the person who under the contract supplies the services is taken not to be an employer.

34 Persons taken to be employees

For the purposes of this Act, a person who during a financial year—

(a) performs work for or in relation to which services are supplied to another person under a relevant contract; or

...

is taken to be an employee in respect of that financial year.

35 Amounts under relevant contracts taken to be wages

(1) For the purposes of this Act, amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract or the re-supply of goods by an employee under a relevant contract are taken to be wages paid or payable during that financial year.

(2) If an amount referred to in subsection (1) is included in a larger amount paid or payable by an employer under a relevant contract during a financial year, that part of the larger amount which is not attributable to the performance of work relating to the relevant contract or the resupply of goods by an employee under the relevant contract is as determined by the Commissioner.

...

Findings of the Tribunal

14 The critical finding of the Tribunal for the purposes of the present appeal is that the return of the Consultation Fees (net of the Occupancy Fees payable to the Trustee) to the Optometrist Entities was not deemed to be “wages” under s 35(1) of the PTA.^[19] The Tribunal also made a number of findings which give context to the present appeal and with which the parties do not cavil:

(a) The Optom Agreements were “relevant contracts” within the meaning of s 32(1) of the PTA.^[20] Implicit in this conclusion is that the Trustee was a deemed employer within the meaning of s 33 of the PTA and the Optometrist Entities were deemed employees within the meaning of s 34(a) of the PTA.

(b) The Consultation Fees earned by the Optometrist Entities from supplying optometry services to the public, and which were directed to be paid into the bank account of the Trustee, were held by the Trustee on express trust for the relevant Optometrist Entity.^[21]

(c) If a net amount was owing at the end of a financial year on account of Location Attendance Premiums paid to the Optometrist Entity (after offsets against Occupancy Fees payable by the Optometrist Entity during that financial year), that net amount was deemed to be “wages” under s 35(1) of the PTA.^[22]

Issues on Appeal

15 The Proposed Notice of Appeal identifies the orders sought in the following terms:^[23]

Orders sought

The Appellant seeks the following orders:

1. The appeal be allowed, and the orders made by the Tribunal in applications Z11/2017, Z12/2017, Z13/2017, Z14/2017, Z15/2017 and Z16/2017 be set aside.
2. The Appellant’s determination in Application Z11/2017, Z12/2017, Z13/2017, Z14/2017, Z15/2017 and Z16/2017 be remitted to the Tribunal constituted by the same member who made the original order for reconsideration, in accordance with law and without the hearing of further evidence.
3. The Respondent pay the Appellant’s costs of and associated with the appeal, including the costs of the application for leave to appeal.
4. Further or other orders as the Court deems appropriate.

16 The Proposed Notice of Appeal also identifies the relevant questions of law and the grounds of appeal pursued by the Commissioner:^[24]

Questions of Law

Question of Law 1: Having found that the deemed employer held moneys on express trust for the deemed employee, did the Tribunal misconstrue the operation of:

(a) s 3C(2)(c) of the Pay-Roll Tax Act 1971 in respect of the financial years that ended on or before 30 June 2007; and

(b) s 35(1) of the Payroll Tax Act 2007 in respect of the financial years that began on or after 1 July 2007,

by deciding that the payment of money by the deemed employer from that trust necessarily could not also be an amount paid or payable ‘for or in relation to the performance of work relating to a relevant contract’ for the purposes of those provisions?

Question of Law 2: Should the Tribunal have instead construed the expression ‘amounts paid or payable... for or in relation to the performance of work relating to a relevant contract’ in:

(a) s 3C(2)(c) of the Pay-Roll Tax Act 1971 in respect of the financial years that ended on or before 30 June 2007; and

(b) s 35(1) of the Payroll Tax Act 2007 in respect of the financial years that began on or after 1 July 2007,

as requiring an examination of all the facts and circumstances surrounding the making of the payments by the deemed employer to determine whether those payments had a relationship with the services supplied to the deemed employer under the relevant contract?

Question of Law 3: Did the Tribunal apply the wrong legal test in deciding whether amounts paid or payable were for or in relation to the performance of work relating to a relevant contract for the purposes of:

(a) s 3C(2)(c) of the Pay-Roll Tax Act 1971 in respect of the financial years that ended on or before 30 June 2007; and

(b) s 35(1) of the Payroll Tax Act 2007 in respect of the financial years that began on or after 1 July 2007?

Grounds of Appeal

1. The Tribunal erred in concluding that a return of money from an express trust cannot also meet the statutory description of an amount ‘paid or payable... for or in relation to the performance of work relating to a relevant contract’ for the purposes of s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007.
2. The Tribunal erred in failing to interpret the expression ‘amounts paid or payable during a financial year for or in relation to the performance of work relating to a relevant contract’ in s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007 in accordance with s 35 of the Interpretation of Legislation Act 1984, having regard to the statutory purpose, context and history.
3. The Tribunal should have construed the expression ‘amounts paid or payable during a financial year for or in relation to the performance of work relating to a relevant contract’ in s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007 as requiring no more than a relationship, whether direct or indirect, between the amounts paid or payable on one hand, and the performance of work under a relevant contract on the other.
4. Having found that the deemed employer to whom services for or in relation to the performance of work were supplied under a relevant contract held moneys on express trust for the deemed employee who performed the services, the Tribunal erred in not examining all the facts and circumstances to ascertain the nature and extent of the connection between:

(a) the payments made by the deemed employer to the deemed employees on one hand; and

(b) the performance of services supplied to the deemed employer under a relevant contract on the other,

to determine whether the requirements of s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007 were satisfied in the relevant financial years.

5. The Tribunal erred in its basis for distinguishing Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127 in so far as there is no relevant distinction between a return of money held on discretionary trust and a return of money held on express trust that would necessarily prevent the latter, but not the former, from being an amount paid or payable for or in relation to the performance of work relating to a relevant contract for the purpose of s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007.
6. The Tribunal erred in failing to have regard to the Appellant’s submission that the approach taken by the High Court in Murdoch v The Commissioner of Pay-Roll Tax (Victoria) [1980] HCA 33; (1980) 143 CLR 629 was relevant to the proper construction of s 3C(2)(c) of the Pay-roll Tax Act 1971 and s 35(1) of the Payroll Tax Act 2007.

17 It is helpful at this stage to unpack the requirements of s 35(1) of the PTA. It is plain from its terms that in order for the passing of money from one party to another to be deemed to be wages by that sub-section, it must be established that the money was:

(a) paid or payable;

(b) by an employer;

(c) during a financial year; and

(d) for or in relation to;

(i) the performance of work relating to a relevant contract; or

(ii) the re-supply of goods by an employee under a relevant contract.

18 There is no controversy as to (b)^[25] and (c) being satisfied, and it is clear that (d)(ii) does not apply. Accordingly there are two live questions which arise on this appeal.

1) Were the moneys which were distributed from each express trust to the relevant Optometrist Entity “paid or payable”?

2) Were those distributions made for or in relation to the performance of work relating to a relevant contract?

The Commissioner submits that both questions should be answered “yes”, while the Taxpayers submit that they should both be answered “no”. It is helpful to note the proper approach to statutory construction generally, before turning to the application of those principles in the context of the consideration of these questions.

Principles of Statutory Interpretation

19 The long and short of the process of statutory interpretation is that one must read the Act. That being so, the parties have each made reference to statements made by courts as to how this is to be done, and these must guide the process of reading the PTA.

20 The Taxpayers made reference to Lotus Projects v Commissioner of State Revenue, where I said:^[26]

19. It is common ground that “the task of statutory construction must begin with a consideration of the text itself”, and that “[t]he language which has actually been employed in the text of legislation is the surest guide to legislative intention”. Nevertheless, the meaning of the statutory text may require consideration of the context, including the general purpose and policy of a provision. ...
20. The relatively recent series of High Court authorities concerning the rules of statutory construction, confirming the primacy of the text, are now well known.^[27] Nonetheless, legislative purpose is also significant and may, depending on the nature, language and clarity of the provisions considered, carry more or less weight. Thus, in the recent decision of Colonial Range Pty Ltd v Ces–Queen (Vic) Pty Ltd,^[28] the Court of Appeal said “[w]here the ordinary meaning of the text is consistent with the legislative purpose, the court will apply that as the legal meaning.”^[29]
21. More particularly, the Court of Appeal in Colonial Range continued:^[30]
    54. Recent statements of the High Court have emphasised the primacy of the text in the resolution of any perceived tension between the text and the legislative purpose of the Act.^[31] Such statements include the following:

(a) “The words of the statute, not non–statutory words seeking to explain them, have paramount significance”.^[32]

(b) “This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text itself ... The language which has actually been employed in the text of legislation is the surest guide to legislative intention”.^[33]

(c) “A second and not unrelated danger that must be avoided in identifying a statute’s purpose is the making of some a priori assumption about its purpose. The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions”.^[34]

...

23. I also emphasised these points in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (receivers and managers appointed),^[35] where I said that “[t]he requirement to identify the legislative intention disclosed by the meaning of the statutory language directs attention to the legislative text”.^[36]

21 The Commissioner noted that where there are multiple possible interpretations of a section, the interpretation which furthers the object of the Act,^[37] or which should be taken to have been intended by Parliament,^[38] should be adopted. The purpose of a statute or of particular provisions in a statute may be determined based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials.^[39] As was noted by Heydon J in Saeed v Minister for Immigration and Citizenship, one should not too readily jump to extrinsic materials:^[40]

In short, as is very common, reading the Explanatory Memorandum and the Second Reading Speech is much less helpful than reading the legislation itself. ... In any event, the ultimate question is not what the Parliament intended to do, but what it actually did.

22 However, statutory context is not irrelevant. As the High Court unanimously stated in Commissioner of Taxation v Consolidated Media Holdings Ltd:^[41]

“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text”.^[42] So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

Were the moneys which were distributed from each express trust to the relevant Optometrist Entity “paid or payable”?

23 As has been noted, the moneys which were distributed from each express trust to the relevant Optometrist Entity were comprised of the Consultation Fees earned by the Optometrist Entities and paid directly to the Trustee—either by the Commonwealth (in respect of bulk billed patients) or by patients—net of the Occupancy Fees. While there is a degree of artificiality about these arrangements, it is critical to recall that the flow of money in respect of which the Commissioner seeks to collect payroll tax is the return of moneys held on express trust by the Trustee for the relevant Optometrist Entity.

Is this issue beyond the scope of the appeal?

24 The submissions of the Commissioner proceed on the basis that this Court is not required to consider this issue because the Tribunal found that the distributions from the express trust were payments and the Taxpayers have not formally indicated they seek to cavil with that finding. Indeed, the Commissioner notes that the critical passage of the Tribunal’s Reasons, among others, does refer to these distributions as “payments”:^[43]

Having found that there was an express trust in place between the Trustee and each Optometrist Entity in relation to the Consultation Fees, the payments to them (albeit net of the Occupancy Fees they contractually owed to the Trustee) was necessarily a return of their moneys and cannot be viewed as a payment for or in relation to the services provided to the Trustee...

[emphasis added]

On the other hand, this paragraph constituted the conclusion of the Tribunal’s analysis under the heading “Is the distribution of the trust amounts a payment for or in relation to the performance of work?”

25 In my view, though the use of the word “payments” in the Tribunal’s Reasons is liable to mislead, the Tribunal should not be taken to have found that the distributions were payments within the meaning of s 35(1) of the PTA. It is not entirely clear whether the Tribunal reached the conclusion just set out because the return of moneys held on express trust was not a “payment”; not “for or in relation to the performance of work”; or less specifically not “a payment for or in relation to the performance of work”. As will shortly be explored in greater detail, the meaning of “payment” is context dependent. In any event, the question of whether a return of money by way of a distribution under an express trust is a payment is subsidiary to the position for which the Commissioner now contends—that the distributions from the express trusts were payments for or in relation to the performance of work relating to a relevant contract—and as this Court is duty bound to consider the veracity of that contention it is necessary to consider the veracity of any premises of that contention which are thought to be dubitable.

Ordinary meaning of “paid or payable”

26 The Commissioner submits that the ordinary meanings of the words “paid” and “payable” are sufficiently broad to apply to the equitable obligation to pay distributions from money held on trust.^[44] Yet it is not, in my view, so simple. Where the person to receive the money is an object of a discretionary trust and no declaration has yet been made in favour of that person, it is clear that a distribution to that person will be a payment. They are, after all, to receive money that was previously not theirs, both as a matter of common sense and in equity. However, if the distribution is to be made under an express trust to a beneficiary under that express trust, the description of the provision of money to that person as a “payment” may be incongruous. In such circumstances, the money distributed already belongs to the “beneficiary” in equity and as a matter of common sense. The same position arises if a declaration has been made by the trustee of a discretionary trust in favour of an object of that discretionary trust, as at that point the object’s interest is that of a beneficiary under an express trust.^[45] Accordingly, while an object of a discretionary trust is “paid” when the trustee makes a declaration in favour of that object under a discretionary trust within the ordinary meaning of that word, the same cannot be said with any certainty in relation to a distribution made under an express trust.

27 Upon considering the nature of payment and perusing its dictionary definitions, two relevant elements of that word and its derivatives arise. First, inherent in the notion of payment is that money is conveyed in exchange for something else. See, for example, the definition in Macquarie Dictionary:^[46]

pay¹ /peI/ v.t. 1. to discharge (a debt, obligation, etc.), as by giving or doing something. 2. to give (money, etc.) as in discharge of debt or obligation. 3. to satisfy the claims of (a person, etc.) as by giving money due...

In this way, a donation does not seem to be a “payment”. However, another sense of “payment” merely requires a flow of funds, and this will be satisfied by a donation. Second, there must be some disunity between the payee and the payer. This is, in a sense, an incident of the first element of “payment”: a person cannot exchange money with themselves. But moreover, there cannot even be a flow of funds if the payee and the payer are identical. That being said, the nature of the disunity which is required is not clear, and it is suggested that it is context dependent. For example, if one transfers a quantity of cash from the left hand to the right, that is clearly not payment, but it is less clear whether the transfer of money between two bank accounts held in the same name could constitute “payment” in the broadest sense of that term. Thus, the ordinary meaning of “payment” is not fixed and is context dependent. It may require that the flow of funds is not gratuitous and it seems to require that there be disunity—of some kind—between the payee and the payer.

Meaning of “paid” within the PTA

28 Of course, the Court is not concerned with the ordinary meaning of “paid” and “payable” but what those words mean in the context of the PTA. For the reasons which follow, to the extent that there might be ambiguity in the ordinary meaning of “paid” as to whether it may include the return of money to a beneficiary under an express trust, it is clear that such a flow of money does not constitute “payment” within the meaning of the PTA.

29 It is helpful to consider as a starting point the definition of “paid” within the PTA:^[47]

paid, in relation to wages, includes provided, conferred and assigned and pay and payable have corresponding meanings;

This definition makes clear that “payment” for the purposes of the PTA, does not require that the transfer of money is in exchange for something else, being the first element of the word to which reference has been made.^[48] However, the requirement that there be disunity between the payee and payer seems to remain: whether a return of funds to a beneficiary under an express trust is a “provision”, “conferral” or “assignment” of funds turns on the same considerations as whether such a distribution is a “payment”: can one provide, confer, assign or pay money to oneself?

30 The Taxpayers submit that the purpose of the PTA militates in favour of finding that the return of moneys held on express trust is not a payment within the meaning of s 35(1) of the PTA.^[49] Payroll tax is, it is said, a tax on wages—not a tax on the return of one’s own money. The concept of “wages” in s 13 of the PTA is one, the Taxpayers submit, that involves a payment by an employer to an employee that can be characterised as “wages, remuneration, salary, commission, bonuses or allowances”. While the flow of money need not be in the nature of consideration to be a payment within the meaning of the PTA, that “wages” generally are of such a nature lends support to the Taxpayer’s contention that a “payment” will not arise unless property passes in the funds.

31 Critically, the Taxpayers submit, the concept of “wages, remuneration, salary, commission, bonuses or allowances”—being a payment in the nature of consideration in exchange for services rendered—does not extend to a return of money by one person to another person in circumstances where the second person earned that money from providing services to a third party and directed the money be paid to the first person and held in trust. The arrangement between a barrister and his or her clerk is said to provide a ready example. The barrister enters into an agreement to provide legal services to the client and directs the client to make payments to the clerk. The clerk retains the agreed clerking fee (and deducts any other disbursements) and pays the balance to the barrister. That amount can be regarded as a “payment” by the clerk to the barrister, in the sense that there is a flow of funds, but it is not a transfer that can be characterised as being in the nature of “wages, remuneration, salary, commission, bonuses or allowances”—or, more critically, as a transfer which affects the beneficial ownership of the relevant money. It makes no difference, it is said, if the payer and payee are in an employment relationship: a return of funds cannot become a payment merely because of the context in which it is made.

32 The Commissioner sought to distinguish this analogy on the basis that no services are provided by a barrister to his or her clerk, and for this reason the clerk could never be liable to payroll tax in respect of the fees they pass on to their barristers. This is difficult to accept. Like the relationship between the Optometrist Entity and the Trustee which is described in paragraphs 84 and 85 of the Tribunal’s Reasons set out below,^[50] the relationship between a barrister and her clerk is symbiotic. The services of the barrister are principally provided to the client, but there is an incidental provision of services to the clerk, such as through business development for both the clerk’s list and for the barrister’s own practice. Of course, nothing turns on this analogy, though it does illustrate that the construction contended for by the Commissioner would give the PTA an unintended reach.

33 The Taxpayers submit that it is important to identify the source of the funds, and rely upon the decision of the High Court in Murdoch v The Commissioner of Pay-Roll Tax (Vic) (“Murdoch”).^[51] In that case, the terms of a will directed the trustee to distribute a proportion of the profits of the business amongst employees in such proportions as the trustees in their absolute discretion thought fit. The Court found that the distributions were “taxable wages” for the purposes of the Pay-roll Tax Act 1971. The majority observed as follows:^[52]

In our opinion, the solution to the problem is to be found in the application of the provisions of the Act to the particular circumstances of the case. In our opinion, such legal character of the payments as may be deduced from the terms of the will are not determinative. In other words, the Act, like all taxing statutes, takes a pragmatic line. So understood, in order to attract the tax the payments must satisfy three requirements: they must be paid by the employer; they must answer the description of “wages” as defined; and they must be paid to employees as such.

...

The key features of the payments are their source and their destination. They came from the net profits of the business, and they were made only to persons who were employees for the time being of that business.

[Taxpayers’ emphasis]

34 Critically, Murdoch does not establish that distributions of money held on trust will be capable of constituting payments for payroll tax purposes regardless of the characterisation of the trust. The reference to the “legal character of the payments” not being determinative is not addressed to the question of whether the flow of money in question is a “payment” within the meaning of the PTA, but rather whether a “payment” within the meaning of the PTA will be “for or in relation to the performance of work”.

35 It is not the case, as the Commissioner would have it, that the only difference between a distribution under a discretionary trust and a distribution under an express trust is the time at which the equitable entitlement to the sum to be distributed arises. Rather, the critical distinction is that an object of a discretionary trust in respect of which no relevant declaration has been made gains a beneficial interest in the sum to be distributed upon a declaration being made, while a beneficiary under an express trust to whom money is distributed from the trust fund does not gain a new equitable interest. Though it is not necessary to decide this question, it is incidental to this conclusion that, for the purposes of the PTA, the declaration in respect of a discretionary trust is the payment and the distribution pursuant to that declaration is merely the machinery by which that payment is effected. In this way, it is the creation of an express trust, not the distribution pursuant to such a trust, which may constitute payment within the meaning of the PTA.

36 Further, it is not necessary for this Court to consider the relevance of the source of the distributions generally. It is sufficient to note the critical importance of the source of the distribution being the beneficiary’s own funds. Newcastle Club Ltd v Commissioner of Taxation,^[53] which is relied upon by the Commissioner, does not materially detract from this position. In that case, Hill J found that it was immaterial that the payments were not sourced from the profits of the club. His Honour also found that it was not necessary to decide whether an express trust had been created,^[54] but critically, this finding arose in the context of an alleged express trust over funds contributed by club members for the benefit of club employees, rather than funds to which the beneficiaries had always been beneficially entitled. What Hill J did not consider, and what is the basis of the distinction sought to be made in the instant case, is the effect on the characterisation of the transfer as a payment or otherwise of the transferee’s pre-existing beneficial interest in the trust funds.

37 The Commissioner relied on Commissioner of Pay-roll Tax (Vic) v Adams to suggest that the characterisation of the “payments” should not be taken to foreclose the question of whether the “payments” were wages within the meaning of the PTA. In that case, McInerney J said:^[55]

The argument of counsel for the trustees was essentially that the subject payments were merely distributions made by the trustees in their capacity as trustees carrying out the terms of the beneficial trust ... which gave them an unfettered discretion to distribute one-tenth of the net profits of Tattersalls to employees for the time being engaged in the business.

It was implicit in the argument that, if the payments were properly characterized in that way, they could not be otherwise characterized, for example, as “bonuses” within the definition of “wages” in s 3(1) of the Act.

In my view there is no such necessary corollary. The argument tends to involve an approach to the problem from the wrong direction. The problem is whether the payments are ones which the Act treats as “wages” for the purpose of assessment of pay-roll tax. So understood, it is appropriate first to consider the payments themselves and whether they were made by an employer to employees and whether they may be properly regarded as bonuses in the ordinary sense in which that expression is properly understood in the context of the employer-employee relationship.

In my view, this reasoning does not apply as a result of the distinction, to which reference has been made,^[56] between distributions under an express trust and distributions under a discretionary trust. If it is accepted that a return of moneys held under an express trust cannot be a payment for or in relation to the performance of work, to consider whether a “payment” is the return of moneys under an express trust is obviously not to approach the problem from the “wrong direction”.

38 The Commissioner correctly notes that the critical difference between the present case and Freelance Global Ltd v Chief Commissioner of State Revenue^[57] is that:^[58]

the trustee in Freelance billed the clients as principal, whereas in this case the Trustee required that the Consultation Fees be paid to it to be held on trust for the Optometrist Entities—albeit that the fees were intermingled in the Trustee’s accounts with funds derived from the Trustee’s other activities ([Tribunal’s] Reasons at [66]–[67]) and the Optometrist Entities’ entitlement to the fees held on trust was subject to their contractual obligation to pay “occupancy fees” to the Trustee under the Optom Agreements.

It is said, presumably by way of submission that this interpretation was not what Parliament intended, that if this distinction suffices to allow the Trustee to avoid payroll tax, it would mean that the operation of the “Relevant Contract” provisions of the PTA could be defeated by simply selecting a different billing structure.^[59] However, it is not, in my view, a question of different billing structures, but rather of significantly different business structures—consider, for example, the different outcomes in an insolvency situation. As has been noted, the rights of a beneficiary under an express trust differ significantly to those of an object of a discretionary trust. Moreover, if the position for which the Commissioner contends in the present case were accepted, it would—it seems—remain open for the parties to each of the Optom Agreements to simply engage an independent trustee to hold the Consultation Fees and by so doing avoid liability to payroll tax.

39 The Commissioner submits that the nature of the distributions as returns of the Optometrist Entities’ own funds must be weighed against a number of facts and circumstances which are said to militate in favour of those distributions being “payments”, and more broadly in favour of those distributions being “payments for or in relation to the performance of work”. In particular, the Commissioner notes:^[60]

(a) that the ‘essential arrangement’ under the Optom Agreements was that the Optometrist Entities would ensure the attendance of optometrists at agreed locations and times to provide optometry services to actual or anticipated customers of the Trustee ([Tribunal’s] Reasons at [84]);

(b) that the services were provided by the optometrists to the customers as well as the Trustee ([Tribunal’s] Reasons at [85]);

(c) that the payment of the Consultation Fees to the Trustee was required under the Optom Agreements ([Tribunal’s] Reasons at [65]);

(d) that under the Optom Agreements, the Optometrist Entities were paid an hourly rate for all hours worked irrespective of whether they earned Consultation Fees or not ([Tribunal’s] Reasons at [71]);

(e) that the arrangements for paying hourly rates were such that the character of the payments made to the Optometrist Entities was not necessarily known at the time the payment was made – if a payment was made that was in excess of Consultation Fees earned, that payment was treated as a ‘loan’ rather than a return of moneys held on trust, and there was scope for the payment to later be characterised at the end of the financial year as either a return of money held on trust or the payment of a ‘Location Attendance Premium’ paid in excess of Consultation Fees earned ([Tribunal’s] Reasons at [72] and [117]);

(f) that the hours worked by a given optometrist had to be ‘signed off’ by store managers as a condition of any payment being made by the Trustee ([Tribunal’s] Reasons at [69]); and

(g) that the Consultation Fees were paid into the Trustee’s main operating account, which meant that they were intermingled with funds derived from the Trustee’s other activities ([Tribunal’s] Reasons at [66]–[67]).

40 In my view, these matters go only to whether an express trust arises on the facts and to the terms of that express trust. Once it is accepted that an express trust exists and that the trust funds were always owned beneficially by the relevant Optometrist Entity, the particular facts cannot alter the essential character of the payments as the return of moneys by way of distributions under an express trust. That essential character is incompatible with the distributions being “payments for or in relation to the performance of work” within the meaning of s 35(1) of the PTA.^[61] The statement in Murdoch that the “legal character of the payments as may be deduced from the terms of the will are not determinative” was addressed to the significance of the legal character of the distributions under a discretionary trust where the trust funds had not always been beneficially owned by the employees, and is for that reason distinguishable.^[62] In my view, the creation of an express trust in favour of an employee—as opposed to distributions under an existing express trust—may, depending on the circumstances, constitute “payment” for the purposes of the PTA, but that is not the case here because the funds always belonged to the Optometrist Entities beneficially.

Significance of s 35(1) being a deeming provision

41 The parties both suggest that the fact that s 35(1) of the PTA is a deeming provision militates in favour of the constructions they respectively advance. The Commissioner submits that the obvious purpose of a deeming provision, such as s 35(1), is to cause the definition to depart from its ordinary meaning. In the context of s 35(1), the Commissioner submits that the purpose is to broaden the definition of “wages” to include instances of the passing of money to which that term would not otherwise apply.^[63] In particular, it is submitted that the words “amounts paid or payable... for or in relation to the performance of work” should be interpreted in their context in Division 7 of Part 3 of the PTA, a division that expands what ordinarily constitutes wages for payroll tax purposes beyond payments made in the context of an employment relationship to include payments made for or in relation to the performance of work relating to a “relevant contract”. This Division was designed to ensure that the performance of work by contractors which would otherwise be performed by employees does not erode the payroll tax base.

42 So much is apparent from the explanatory memorandum to the bill which originally introduced these provisions:^[64]

Over the last five or six years there has been an accelerated erosion of the pay-roll tax base through the increased propensity of employers to engage new staff as contractors rather than as employees, and to convert existing employees to contractor status. Where a contracting relationship has been substituted for what was traditionally an employer/employee relationship, payment for the supply of services is typically made to a contractor, partnership, family trust or trustee. In many instances the employer/employee nexus is broken by sophisticated arrangements whereby the “worker’s” services are supplied to the employer under a contract between the employer and the corporate trustee of the “worker’s” family trust. It is now common in nearly all industries for contractors to be performing identical tasks to those being performed by employees, to be under the same amount of control and direction as employees and to have comparable length of service...

43 Against this position, the Taxpayers note that deeming provisions are to be construed strictly.^[65] As observed by Gageler J in Wellington Capital Ltd v Australian Securities and Investments Commission, provisions which create a legal fiction are “not construed to have a legal operation beyond that required to achieve the object of its incorporation”.^[66]

44 From the text of Division 7 of Part 3 of the PTA and the Explanatory Memorandum on which the Commissioner relies,^[67] it is plain that s 35(1) was introduced to ensure that “amounts paid or payable” which would otherwise have been wages because they would have been paid or payable in the context of an employment relationship are not able to avoid being characterised as “wages” by virtue of being paid or payable outside of an employment relationship. In this way, the intention is to expand the definition of “wages” and to do so in a particular way.^[68] So much was recognised by Murphy J in Mayne Nickless Ltd v Mackintosh:^[69]

... The emphasis throughout the explanatory memorandum [to the Pay-Roll Tax (Amendment) Bill (No 2) 1983] is laid on casting a wide net in order to catch all those whether workers or employers, who might seek by a stratagem to avoid the payment of pay-roll tax, otherwise applicable to an employer/employee relationship. The emphasis is placed upon the stratagem, whether initiated by the “worker” or by the “employer”, and thus there are included exemptions designed to exempt, what I may broadly call, certain normal business transactions.

There is manifestly no intention in Division 7 of Part 3 of the PTA to impose payroll tax liability on the passing of money which would not otherwise amount to payment—this is patently not the purpose of the introduction of the Division.^[70] There being no intention to affect what is included in the notion of “payment” as that term is used in the PTA, that term must be understood as it used in the balance of that Act.

45 The Commissioner also submits that textual considerations also militate in favour of “amounts paid or payable... for or in relation to the performance of work” in s 35(1) of the PTA being given a broad and flexible construction because the provisions do not contain requirements as to the source of funds from which the amount is paid or payable, or the capacity in which the payment is to be made other than the requirement that the payer is an employer within the meaning of s 33 of the PTA. While this may be so, as is discussed above, that flexibility does not extend to the phrase “paid or payable”, which must be taken to be used consistently with the balance of the PTA. That a “payment” within the meaning of the PTA cannot arise where the payee already has a beneficial interest in the sum to be transferred is, in my view, concordant with the overall scheme and structure of the PTA which is concerned with the imposition of tax upon wages and the passing of money which resembles wages rather than upon the transfer of legal title in money to the holder of the beneficial interest.

Conclusion on the meaning of “paid or payable” within the PTA

46 The relevant contract provisions impose payroll tax on amounts that are “paid or payable by an employer... for or in relation to the performance of work”. In this way, the PTA requires that amounts that can be characterised as “payments” by the employer to the employee be identified. The meaning of “payments” within the PTA does not extend to a return of money by one person to another in circumstances where the second person earned that money from providing services to a third party and directed the money be deposited in the bank account of the first person and held in trust. The amounts returned to the Optometrist Entities were not “paid or payable for or in relation to the performance of work” within the meaning of s 35(1) of the PTA with the effect that payroll tax cannot be collected in respect of those amounts. Accordingly, the appeal must fail.

47 For completeness, I turn now to consider whether, if the distributions were “payments” within the meaning of s 35(1) of the PTA, they were “for or in relation to the performance of work”.

Were the distributions from each express trust to the relevant optometrist entities made for or in relation to the performance of work relating to a relevant contract?

48 The Commissioner submits that the requisite relationship for the purposes of s 35(1) arises out of the same facts which the Tribunal relied upon to find that a relevant contract existed for the purposes of s 32(1):^[71]

84. In my view, the essential arrangement between the Trustee (and the trustees of the BAT and IOBT) and Optometrist Entities was that the Optometrist Entities would ensure the attendance of optometrists (including but not limited to the optometrist associated with the entity) at locations and times to be agreed, in order that those optometrists would provide optometry services to actual or anticipated customers of the Trustee.
85. The arrangements were put in place to benefit the Trustee (and the trustees of the BAT and IOBT) because the provision of optometry services on site would lead to increased sales of frames, lenses and other optometry products. The provisions of, and the language used in, the Optom Agreements are consistent with attempts to secure those benefits. Given the breadth of the terms used in the payroll tax legislation, there is no incongruity in finding that the services of the optometrists were provided to the Trustee as well as to the patients.

[citations omitted]

Reliance is also placed on the structure of the relationship between the Optometrist Entities and the Trustee as a whole.^[72]

49 The relationship required by “in relation to” is context dependent,^[73] but generally and, the Commissioner submits, in the present context, requires no more than a relationship, whether direct or indirect, between two subject matters.^[74] It is plain that a broader relationship is permitted by the phrase “in relation to” than that which is permitted by the word “for”. The word “for” suggests that the payment must be made in consideration of “the performance of work”, though the Commissioner correctly notes that “in relation to” does not carry with it such a requirement.^[75] While it is true that “in relation to” may in certain contexts require a relationship that is direct and immediate,^[76] there is no basis for such an interpretation in the present context.

50 As the Commissioner correctly notes, in order to capture a wide range of potential contracting arrangements within the operation of the provisions, the definition of “relevant contract”—which has been reenacted in s 32(1) of the PTA—was deliberately drafted broadly.^[77] That definition, like s 35(1) of the PTA, contains the phrase “for or in relation to the performance of work”, albeit in the context of whether services are for or in relation to the performance of work. Nonetheless, the Commissioner submits that the intention that the definition of “relevant contract” be broad should flow through to the use of that phrase in s 35(1) of the PTA, especially in circumstances, to which reference has been made,^[78] where the function of section 35(1) is to expand the circumstances in which a payment may be treated as “wages” for payroll tax purposes so as to guard against erosion of the payroll tax base. The same phrase is used in the same division and was introduced by the same amending Act. The phrase “for or in relation to” in s 35(1) must be interpreted broadly, and there is no basis for the Taxpayers’ suggestion that the payments referred to in that section must be in the nature of consideration for the performance of work.^[79] While it is true that s 35(1) is a deeming provision that must be interpreted strictly, so too is s 32(1).

51 What is more, taking a broad approach to provisions of this kind is concordant with the approach taken to interstate payroll tax legislation. In H R C Hotel Services Pty Ltd v Chief Commissioner of State Revenue, Ward CJ in Eq found:^[80]

In this regard, it is significant in my opinion that the construction advanced by the plaintiffs gives no work for the words “in relation to” to do in s 40(1)(a) of the Payroll Tax Act. Those are words recognised to be of considerable breadth (as was accepted in the course of argument as to the narrower ambit of the words “under which” in s 37(1)). In my opinion, those words expand the reach of the deemed wages under s 40(1)(a) beyond the actual amounts paid to the additional housekeeping staff. Were it otherwise, the section could simply have referred to wages or amounts paid to the service provider without the inclusion of the words “in relation to”.

52 Nonetheless, as the Taxpayers submit, given there is no reference to payment or income in the definition of “relevant contract”, it is entirely possible that there may be arrangements between parties that fall within the definition of “relevant contract”, but no payments can be identified that are deemed to be “wages” by s 35(1) of the PTA. It may be that there are no payments “for or in relation to the performance of work” notwithstanding that there is an agreement “for or in relation to the performance of work”. However, for the reasons which follow, I accept the submission of the Commissioner that if the distributions under the express trusts were “payments” within the meaning of the PTA, they were “payments for or in relation to the performance of work”.

53 The Commissioner makes reference to Newcastle Club Ltd v Commissioner of Taxation, which provides some guidance on the phrase “for or in relation to the performance of work”:^[81]

The word “employee” as used in the composite expression “employee as such” clearly means a person in an ordinary employer/employee relationship and to this end presents a contrary intention to the defined meaning in s 221A(1). The consequence, as has been emphasised in cases, most of which concern the corresponding definition in State payroll tax legislation, is that it is not sufficient for the amount to be merely received by a person who happens to be an employee, the amount in question must be paid to the employee in that employee’s capacity as employee.

[emphasis added]

54 What is critical in determining whether the distributions were for or in relation to the performance of work is the breadth of the phrase “in relation to” both generally and in the context of the PTA. Once that is accepted, it is plain that in circumstances where the distributions were—in substance—made as a result of the provision of optometry services by the Optometrist Entities, those distributions were for or in relation to the performance of work. Indeed the moneys which were distributed were earned through the relevant work, being the provision of optometry services to the public. Though it is true that the bulk of the work was done for patients, rather than the Trustee, as the Tribunal found, services were also provided to the Trustee.

55 Finally, it should be noted that the Tribunal concluded that the Location Attendance Premiums were “payments for or in relation to the performance of work”,^[82] and the Taxpayers do not cavil with this finding. The Taxpayers have failed to identify any basis on which the distributions to the Optometrist Entities can be distinguished from the Location Attendance Premiums for the purposes of s 35(1) if it is assumed that the distributions are payments. Accordingly, if the distributions to the Taxpayers were payments, they would be “for or in relation to the performance of work”.

Leave to appeal

56 The proposed appeal concerns a question of law on which there appears to be no direct authority. The question of law is an issue of general or public importance as it is one that is likely to arise in future payroll tax cases and be relevant to the Commissioner’s determination of such cases. The Commissioner has demonstrated that there is a real or significant argument that error exists in relation to the Tribunal’s decision.^[83] Each ground of appeal sought to be relied upon in the Proposed Notice of Appeal related to the same essential issue, and so there is no relevant distinction affecting the issue of leave. Accordingly, leave to appeal is granted on all grounds.

Conclusion

57 For the preceding reasons, the distributions to the Optometrist Entities were not “payments” within the meaning of the payroll tax acts because the Optometrist Entities beneficially owned the funds which were to be distributed to them under the respective express trusts.

58 On this basis, leave to appeal is granted and the appeal dismissed in respect of all grounds of appeal. Parties are to provide orders to give effect to these reasons. I otherwise reserve the question of costs and will hear the parties further on this issue.

SCHEDULE OF PARTIES

---

^[1] See The Optical Superstore Pty Ltd & Ors v Commissioner of State Revenue (Review and Regulation) [2018] VCAT 169 (“the Tribunal’s Reasons”).

^[2] Tribunal’s Reasons, [110].

^[3] An expression now well understood: see R (Miller) v Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin).

^[4] S ECI 2018 00044 (with respect to VCAT Proceeding No. Z12/2017), S ECI 2018 00045 (with respect to VCAT Proceeding No. Z13/2017), S ECI 2018 00046 (with respect to VCAT Proceeding No. Z14/2017), S ECI 2018 00047 (with respect to VCAT Proceeding No. Z15/2017), S ECI 2018 00048 (with respect to VCAT Proceeding No. Z16/2017) and S ECI 2018 00049 (with respect to VCAT Proceeding No. Z11/2017).

^[5] Order made by Croft J (6 April 2018).

^[6] Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335–6 and Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48 at 55 [28].

^[7] (2011) 83 ATR 832 at 833–4 [3].

^[8] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608; (2010) 81 ATR 682 at 687 [10].

^[9] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163; (2007) 18 VR 48.

^[10] See Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475.

^[11] Osland v Secretary to the Department of Justice [No 2] [2010] HCA 24; (2010) 241 CLR 320 at 333 [21].

^[12] Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475; Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335.

^[13] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335–6; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203; (2006) 63 ATR 65 at 69 [20], 77 [65].

^[14] [2005] HCA 40; (2005) 222 CLR 115 at 136 [64].

^[15] Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22; (1997) 191 CLR 559 at 575, 597. Cf Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at 348 [74].

^[16] Appellant’s Submissions in Reply (18 June 2018), [16].

^[17] The Optical Superstore Pty Ltd & Ors v Commissioner of State Revenue (Review and Regulation) [2018] VCAT 169.

^[18] Transcript, 1, 60–1.

^[19] See Tribunal’s Reasons, [105]–[110].

^[20] Tribunal’s Reasons, [89].

^[21] Tribunal’s Reasons, [102]–[104].

^[22] Tribunal’s Reasons, [111]–[118].

^[23] Proposed Notice of Appeal (2 March 2018).

^[24] Proposed Notice of Appeal (2 March 2018).

^[25] As to whether a payment may be made by an employer when it is made by the employer in its capacity as trustee of a trust, see Murdoch v The Commissioner of Pay-Roll Tax (Vic) [1980] HCA 33; (1980) 143 CLR 629 at 644; Newcastle Club Limited v Commissioner of Taxation (1994) 53 FCR 1 at 7–8.

^[26] [2017] VSC 63, [19]–[21], [23].

^[27] Refer, for a recent example, to the useful summary by the Court of Appeal of these rules in Colonial Range Pty Ltd v Ces–Queen (Vic) Pty Ltd [2016] VSCA 328, [47]–[51] (“Colonial Range”).

^[28] [2016] VSCA 328.

^[29] [2016] VSCA 328, [50].

^[30] [2016] VSCA 328, [54].

^[31] See examples cited in Commissioner of State Revenue v EHL Burgess Properties Pty Ltd [2015] VSCA 269, [56]–[62] and the discussion in Di Paolo v Salta Constructions Pty Ltd [2015] VSCA 230, [32]–[48] and Lowe v R [2015] VSCA 327, [12]–[18].

^[32] Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529 at 538 [22].

^[33] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue  [2009] HCA 41 ; (2009) 239 CLR 27 at 46–7 [47].

^[34] Certain Lloyd’s Underwriters v Cross ([2012] HCA 56; 2012) 248 CLR 378 at 390 [26].

^[35] [2014] VSC 334.

^[36] Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (receivers and managers appointed) [2014] VSC 334, [466].

^[37] See Interpretation of Legislation Act 1984 s 35; Commissioner of State Revenue v EHL Burgess Properties Pty Ltd (2015) 209 LGERA 314 at 329–30 [55].

^[38] See Independent Commission Against Corruption v Cunneen (2015) 256 CLR 1 at 28 [57].

^[39] Certain Lloyd’s Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56; (2012) 248 CLR 378 at 389 [25]; see also Interpretation of Legislation Act 1984 s 35(b).

^[40] Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 at 277–8 [74].

^[41] [2012] HCA 55; (2012) 250 CLR 503 at 519 [39]; see also Lowe v The Queen [2015] VSCA 327; (2015) 48 VR 351 at 359 [18].

^[42] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue  [2009] HCA 41 ; (2009) 239 CLR 27 at 46  [47] .

^[43] Tribunal’s Reasons, [110]; see also, [69], [90].

^[44] Outline of Appellant’s Submissions (30 April 2018), [23] citing White v Elmdene Estates Ltd [1960] 1 QB 1 at 16.

^[45] Cf Outline of Appellant’s Submissions (30 April 2018), [21]–[23].

^[46] Macquarie Dictionary (6^th ed, 2013).

^[47] Payroll Tax Act 2007 s 3.

^[48] See above, [27].

^[49] Respondents’ Outline of Submissions (1 June 2018), [18].

^[50] See below, [48].

^[51] [1980] HCA 33; (1980) 143 CLR 629.

^[52] Murdoch v The Commissioner of Pay-Roll Tax (Vic) [1980] HCA 33; (1980) 143 CLR 629 at 644; see also at 639.

^[53] (1994) 53 FCR 1.

^[54] Newcastle Club Ltd v Commissioner of Taxation (1994) 53 FCR 1 at 7.

^[55] Commissioner of Pay-roll Tax (Vic) v Adams (1980) 10 ATR 629 at 635.

^[56] See above, [26] and following.

^[57] [2014] NSWSC 127.

^[58] Appellant’s Submissions in Reply (18 June 2018), [15].

^[59] Appellant’s Submissions in Reply (18 June 2018), [15]; Transcript, 57.

^[60] Appellant’s Submissions in Reply (18 June 2018), [17].

^[61] Cf Transcript, 36.

^[62] Murdoch v The Commissioner of Pay-Roll Tax (Vic) [1980] HCA 33; (1980) 143 CLR 629 at 644.

^[63] Transcript, 38.

^[64] Explanatory Memorandum, Pay-Roll Tax (Amendment) Bill (No 2) 1983, 1–2.

^[65] Commissioner of Taxation v Comber [1986] FCA 92; (1986) 10 FCR 88 at 96; Telstra Corporation Ltd v Australasian Performing Rights Association Ltd [1997] HCA 41; (1997) 191 CLR 140 at 174.

^[66] Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; (2014) 254 CLR 288 at 314 [51]; see also Ellison v Sandini Pty Ltd [2018] FCAFC 44, [209].

^[67] Explanatory Memorandum, Pay-Roll Tax (Amendment) Bill (No 2) 1983.

^[68] Cf Appellant’s Submissions in Reply (18 June 2018), [10].

^[69] [1989] VicRp 79; [1989] VR 878 at 883; DSG Pty Ltd v Victorian Workcover Authority [2008] VSCA 42; (2008) 20 VR 514 at 521–2 [31]–[34].

^[70] Cf Appellant’s Submissions in Reply (18 June 2018), [7]–[8].

^[71] Tribunal’s Reasons, [84]–[85].

^[72] See the matters referred to above, [39].

^[73] Travelex Ltd v Federal Commissioner of Taxation [2010] HCA 33; (2010) 241 CLR 510 at 519–20 [25].

^[74] See Airservices Australia v Canadian Airlines International Ltd (2000) 202 CLR 133 at 219 [242].

^[75] See also Appellant’s Submissions in Reply (18 June 2018), [5]–[6], [11].

^[76] Hatfield v Health Insurance Commission [1987] FCA 286; (1987) 15 FCR 487 at 491 citing Ausfield Pty Ltd v Leyland Motor Corporation of Australia Ltd (No 2) (1977) 30 FLR 477 at 480.

^[77] See Payroll Tax Act 2007 s 32(1); see also Mayne Nickless Ltd v Mackintosh [1989] VicRp 79; [1989] VR 878 at 883.

^[78] See above, [41]–[45].

^[79] See Respondents’ Outline of Submissions (1 June 2018), [3], [22], [28], [31].

^[80] [2018] NSWSC 820, [181].

^[81] (1994) 53 FCR 1 at 4 citing Mutual Acceptance Co Ltd v Commissioner of Taxation (Cth) [1944] HCA 34; (1944) 69 CLR 389 at 396.

^[82] Tribunal’s Reasons, [115]–[116].

^[83] See Myers v Medical Practitioners’ Board of Victoria (2008) 23 VR 48 at 55–6 [28].