Background
This matter concerned 2 taxpayers:
- Team Sports Pty Ltd, which was incorporated in July 2019 and its business involved the wholesale distribution of Nike-branded teamwear for soccer teams
- Ultra Football Pty Ltd, which was incorporated in July 2015, with a view to establishing Nike teamwear in Sydney.
The taxpayers sought review of the Commissioner’s decision to disallow objections to 4 payroll tax assessments on the basis that Team Sports Australasia Pty Ltd formed a group with Ultra Football Pty Ltd under s 72 of the Payroll Tax Act 2007 (the Act).
Issue
Whether the Tribunal is empowered to (and should) exercise the discretion in s 79 of the Act to treat the Applicants as not being members of a group.
Decision
On 11 December 2023, the Tribunal found in favour of the Commissioner and confirmed the assessments, including penalty tax and interest.
The Tribunal was not satisfied that the taxpayers’ businesses were carried on independently and were not connected with one another and so found that the discretion to degroup the taxpayers was not enlivened.
This was primarily because of the:
- control exercised over both companies
- common ownership of the taxpayers
- the financial interconnectedness between them (including Team Sports affording Ultra Football more favourable credit terms).
