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Service Contracts and Application of Payroll Tax – Important Changes

In the very recent decision of JP Property Services Pty Limited v Commissioner of State Revenue, the Court found that contracts entered into for the performance of incidental services to a business do not attract the employee agency payroll rules, however, if the functions are integral to the business, then payroll tax will likely apply.

The Court held that whether the work was “integral” was based upon whether the service was performed to help the client conduct its business in much the same way as it would by way of an employee.

The case involved a service contract between UNSW Global and Franklins Supermarkets. UNSW would provide workers to clean the Franklins Supermarkets after hours. As the work was performed after business hours, it was not an “integral” part of the business and, therefore, payroll tax did not apply.

The court went on to say that if UNSW Global had provided cleaners that worked during business hours, payroll tax would apply because Franklins Supermarkets owed a duty of care to shoppers to keep the premises safe from spills, being an “integral” part of conducting business.

We strongly recommend that you review your current service relationships and underlying contracts in the context of this recent decision.

Please contact Meghan Warren, Principal, of our office on (03) 9822 8588 to discuss further.

Contacts

Meghan Warren

Principal

Meghan Warren

Principal
LL.B GAICD B.Bus (FinPlan)
Meghan is one of the few lawyers in Australia admitted in the State (Victoria) and Federal jurisdictions of Australia, and as an Attorney at Law to the New York State Bar in the United States.

Kristy Muhlhan

Principal

Kristy Muhlhan

Principal
LL.B (Hons) GRAD DIP. L.P., GAICD.
Since 2014, she has been an owner and Principal of the firm and has mastered a broad range of essential commercial and business skills which go hand in hand with the work she does for...

Rosy Roberts

Principal

Rosy Roberts

Principal
LL.B (Hons) B.A GAICD
Rosy has extensive experience in Litigation & Alternative Dispute Resolution having represented clients in all Victorian State Courts and the High Court of Australia. She is also a VCAT appointed Administrator.

Anthony Burke

Consultant

Anthony Burke

Consultant
B.A LL.B DIP.FIN. MGT
Tony is an LIV accredited business law specialist and a VCAT appointed Administrator. In 2008 he was President of the Law Institute of Victoria and served for two years as a director of the Law...

Stewart Davis

Associate

Stewart Davis

Associate
LL.B (Hons) B.Com
As well as property law, Stewart has had exposure to VCAT administration matters and commercial law, particularly servicing developer clients.

George Hanger

Associate

George Hanger

Associate
LL.B BA
George was admitted to legal practice in May 2015 after completing a Bachelor of Arts at the University of Melbourne and a Bachelor of Laws at Monash University.

Antonela Graso

Paralegal

Antonela Graso

Paralegal
Whilst completing her professional business and law tertiary qualifications, Antonela provides efficient and effective legal support services to our valued teams and clients.

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