A recent case, Snowy Monaro Regional Council v Chief Commissioner of State Revenue [2017] NSWCATAD 14, a decision of the New South Wales Civil and Administrative Tribunal, is a reminder for local councils to ensure all activities for which they pay wages are eligible for payroll tax exemption.
The general design of State payroll tax laws is to exempt wages paid by local Councils, but for the exemption not to apply to wages payable in relation to specified activities undertaken by Council. The specified activities are broadly intended to ensure Councils are not given an advantage over other businesses that undertake similar activities but which are required to pay PRT.
In this case, s. 58 of the NSW Payroll Tax Act 2007 provided an exemption for wages paid by a local council. However s. 60 provided that wages payable by Council in relation to an activity specified in ss. 60(2) are not exempt.
Subsection 60(2) lists a range of activities and ss. 60(2)(d)(v) included the conduct of hostels.
The matter in question involved whether wages paid by the Snowy Monaro Regional Council could be said to be payable to employees engaged in activities being the conduct of a hostel. The relevant employees worked at a facility called Yallambee Lodge Aged Care Centre. The Tribunal needed to determine whether Yallambee was a hostel for the purposes of ss. 60(2)(d)(v).
The taxpayer argued the facility was a specialised age care facility providing palliative care and assistance to elderly residents with complex personal care needs.
The Revenue Office sought to argue the facility was a hostel within the ordinary meaning of that word.
The ordinary meaning of a hostel suggests low cost accommodation (board and lodging) of a temporary nature.
The Tribunal placed emphasis on the facts that residents pay significant sums to reside at Yallambee, effectively becoming permanent residents thereof, and the high need requirements of the residents.
The Tribunal noted that it was not a specific test in ss. 60(2) as to whether the facility competed with other similar care providers which were subject to PRT.
The Tribunal was satisfied the matter turned on whether the Yallambee facility was a hostel within the ordinary meaning of that term and it was satisfied Yallambee was not a hostel.
The decision is a timely reminder to TaxEd member Councils to review your PRT treatment in light of any exclusions to general local Council PRT exemption that may apply in their jurisdiction.
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