Furniture business wins payroll tax dispute over entity groupings

The proceedings concerned a dispute between a furniture business, Winya Indigenous Office Furniture Pty Ltd, and the chief commissioner of state revenue for NSW over assessments of payroll tax.

The commissioner of state revenue claimed that the Payroll Tax Act 2007 (NSW) allowed for the furniture business to be grouped with certain other entities and would be assessed for payroll tax on this basis.

The applicant, Winya Indigenous Office Furniture, rejected this assessment and stated that payroll tax should not be payable on this basis.

The Tribunal therefore had to determine whether payroll tax should be assessed on the basis of the furniture business being grouped with the other entities.

Winya Indigenous Office Furniture was first registered on 12 March 2015 as an Australian company limited by shares. Debbie Barwick was the founder of Winya Indigenous Office Furniture and a shareholder and director of the company at all relevant times.

In September 2019, Vibe Furniture Pty Ltd purchased 49 per cent of the shares in Winya Indigenous Office Furniture. Vibe was a wholly owned subsidiary of Inventis Limited. The other shareholder at relevant times was Barwick, who held the remaining 51 per cent of the shares in Winya Indigenous Office Furniture.

Anthony Mankarios and Peter Bobbin were directors of Vibe and other Inventis Group entities at relevant times. They became directors of the Applicant following Vibe’s acquisition of 49 per cent of Winya Indigenous Office Furniture. There were two other directors of Winya Indigenous Office Furniture at relevant times. They were Ms Barwick and Mr Malcolm Smith.

Under the shareholders’ agreement made between Vibe, Winya Indigenous Office Furniture, and Barwick, Vibe was required to provide accounting and human resources services to Winya Indigenous Office Furniture. There was no other written agreement for the provision of these services, but it was agreed by the parties that the services had been provided.

There were services other than accounting and human resources services provided to the Applicant by Inventis Group entities from April 2021 to May 2024. They included operational, information technology support, sales, marketing, and payroll services. The Winya Indigenous Office Furniture said that these arrangements were made to try to reduce administrative costs.

As part of the agreement, Inventis Group also advertised products of the Winya Indigenous Office Furniture on its website.

The Tribunal noted that the evidence suggested that the actual services provided came from Inventis HR Services Pty Ltd, a wholly owned subsidiary of Inventis. Mankarios and Bobbin were also directors of Inventis HR Services.

There were commercial dealings between the applicant and members of the Inventis Group. The applicant purchased stock from entities within the Inventis Group. There was evidence that these purchases made up between 1 per cent and 17 per cent of its gross turnover during the period for which the disputed assessments of payroll tax had been made.

The commissioner of state revenue contended that Winya Indigenous Office Furniture was grouped with Inventis HR Services because it shared common employees with Inventis HR Services. The respondent went on to say that the group was subsumed into a larger group by reason of common members. The commissioner said that these circumstances also allowed for the “grouping” of Winya Indigenous Office Furniture and Inventis HR Services with the other entities the respondent identified, including Vibe.

The commissioner stated that Vibe did not have any employees itself and so could not supply the persons required to provide the applicant with the services Vibe had agreed to provide. The respondent submitted that the actual accounting and human resource services provided to the applicant came from Inventis HR Services.

The respondent’s submission stated that because one or more employees of Inventis HR Services performed duties for or in connection with, or in fulfilment of obligations under an agreement, arrangement or understanding to provide relevant services to the business carried out by the applicant, this meant that s 71(3) of the PTA was triggered, and a group was created.

However, Tribunal senior member MacIntyre ruled that as Winya Indigenous Office Furniture was carried on independently, the business could be excluded from the relevant group.

“I do not think that the factors described above going to ownership and control, business synergies, shared services, advertising and intra-group purchases carry sufficient weight to disentitle the Applicant’s claim for exclusion from the group in question,” said MacIntyre.

The Tribunal therefore determined that the applicant was not a member of the group formed with Inventis HR Services and other members of the Inventis Group.

The commissioner of state revenue’s decision to group the entities was overturned.