Relevant contracts
Background
The taxpayers operated pursuant to licence agreements with Optical Superstore Pty Ltd as trustee for the OS Management S Trust (Optical Superstore). ‘Tenancy agreements’ were entered into between Optical Superstore and optometrists with ‘rental’ payable based on the time they provided their services at the relevant taxpayers’ stores. The Commissioner classified the ‘tenancy agreements’ as ‘relevant contracts’ and issued payroll tax re-assessments for six financial years.
At first instant, the Tribunal (The Optical Superstore Pty Ltd as Trustee for OS Management S Trust & Ors v Commissioner of State Revenue (Review and Regulation) [2018] VCAT 169) found, in summary, that the agreements between the Optical Superstore and optometrists were relevant contracts but the amounts paid to them were not ‘paid or payable for or in relation to the performance of work relating to a relevant contract’ because those amounts were paid to the optometrists from an express trust.
The Commissioner sought leave of the Supreme Court and appealed the specific finding of the Tribunal that those payments were not “paid or payable for or in relation to the performance of work” relating to a relevant contract. The Supreme Court (Commissioner of State Revenue v The Optical Superstore Pty Ltd as Trustee for OS Management S Trust and Ors [2018] VSC 525) dismissed the Commissioner’s appeal against the Tribunal’s decision that the fees charged by optometrists to patients held on express trust could not constitute an amount ‘paid or payable’ for or in relation to the performance of work relating to a relevant contract. However, if it is, then it would be “for or in relation to the performance of work relating to a relevant contract”.
On the Commissioner’s further leave application and appeal, the Court of Appeal (Commissioner of State Revenue v The Optical Superstore Pty Ltd as Trustee for OS Management S Trust and Ors [2019] VSCA 197), in a unanimous judgement, allowed the Commissioner’s appeal and held that the ordinary meaning of ‘payment’ embraced a payment of money to a person beneficially entitled to that money.
Decision
On 12 February 2020, the High Court of Australia refused the taxpayers’ special leave application because the decision of the Court of Appeal was ‘not attended by sufficient doubt’.
