ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC and COMMISSIONER OF STATE REVENUE
[2015] WASAT 74
•2 JULY 2015
ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC and COMMISSIONER OF STATE REVENUE [2015] WASAT 74
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2015] WASAT 74 | |
| PAY-ROLL TAX ASSESSMENT ACT 2002 (WA),TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | CC:46/2015 | 20 APRIL 2015 | |
| Coram: | JUDGE T SHARP (DEPUTY PRESIDENT) | 2/07/15 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC COMMISSIONER OF STATE REVENUE |
Catchwords: | Payroll tax Exemption Charitable body or organisation Date of operation of exemption Commissioner's Practice PT 3.0 |
Legislation: | Pay-roll Tax Assessment Act 2002 (WA), s 5(2), s 6, s 6A(1)(a), s 7, s 7(1), s 26(1), s 26(3)(a), s 26(3)(b), s 29, s 40, s 40(2)(n), s 41, Pt 5 Revenue Laws Amendment (Assessment) Act 1997 (WA), s 13(3) State Administrative Tribunal Act 2004 (WA). s 17, s 27(1), s 29(1) Taxation Administration Act 2003 (WA), s 16, s 16(2)(b), s 34, s 37, s 40, s 54, s 54(1)(a), s 127 |
Case References: | Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2013] WASAT 107 Chamber of Commerce and Industry of Western Australia (Inc) v Commissioner of State Revenue [2012] WASAT 146 Hoar and Commissioner of State Revenue [2007] WASAT 83 Minister for Aboriginal Affairs & Anor v Peko-Wallsend Limited & Ors (1986) 162 CLR 24 NEAT Domestic Trading Pty Ltd v AWB Limited (2003) 216 CLR 277 Quark Technologies Pty Ltd & Anor v Workcover (1998) 70 SASR 153 |
Orders | On the application before Deputy President, Judge Sharp on 2 July 2015, it is ordered that:,1. The application is dismissed. |
Summary | Towards the end of 2012, the applicant applied to the Commissioner of State Revenue for an exemption from liability to payroll tax on the ground that it is a 'charitable body or organisation'. That exemption was granted, but the Commissioner specified that the exemption only came into operation on 1 July 2012. The applicant objected, saying that the exemption should apply for a period of at least five years prior to the date the exemption was granted.,The Commissioner disallowed the applicant's objection and the matter came before the Tribunal. ,The Tribunal considered the provisions of the Payroll Tax Assessment Act 2012 (WA) and Commissioner's Practice PT 3.0. The Act provides that the Commissioner may specify any day, past present or future, for when the exemption is to apply, but Commissioner's Practice PT 3.0 says that 'generally' the Commissioner will only apply the exemption from the first day of the financial year in which the application is made.,The Tribunal concluded that Commissioner's Practice PT 3.0 did not reflect the unfettered nature of the Commissioner's discretion to fix a date and that it did not specify the circumstances under which a particular date would be applied. The Tribunal therefore considered the applicant's application on the basis of the discretion provided under the Act.,The Tribunal concluded that the appropriate starting point was that the exemption should come into force from the financial year in which it is granted and then consider whether there are circumstances which would dictate that another date is more appropriate. The applicant did not provide any other circumstances which could be taken into consideration and accordingly the Tribunal found that the Commissioner's decision was the correct and preferable one. Accordingly, the Tribunal upheld the Commissioner's decision and dismissed the applicant's application. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : PAY-ROLL TAX ASSESSMENT ACT 2002 (WA)
- TAXATION ADMINISTRATION ACT 2003 (WA)
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Payroll tax Exemption Charitable body or organisation Date of operation of exemption Commissioner's Practice PT 3.0
Legislation:
Pay-roll Tax Assessment Act 2002 (WA), s 5(2), s 6, s 6A(1)(a), s 7, s 7(1), s 26(1), s 26(3)(a), s 26(3)(b), s 29, s 40, s 40(2)(n), s 41, Pt 5
Revenue Laws Amendment (Assessment) Act 1997 (WA), s 13(3)
State Administrative Tribunal Act 2004 (WA). s 17, s 27(1), s 29(1)
Taxation Administration Act 2003 (WA), s 16, s 16(2)(b), s 34, s 37, s 40, s 54, s 54(1)(a), s 127
Result:
Application dismissed
Summary of Tribunal's decision:
Towards the end of 2012, the applicant applied to the Commissioner of State Revenue for an exemption from liability to payroll tax on the ground that it is a 'charitable body or organisation'. That exemption was granted, but the Commissioner specified that the exemption only came into operation on 1 July 2012. The applicant objected, saying that the exemption should apply for a period of at least five years prior to the date the exemption was granted.
The Commissioner disallowed the applicant's objection and the matter came before the Tribunal.
The Tribunal considered the provisions of the Payroll Tax Assessment Act 2012 (WA) and Commissioner's Practice PT 3.0. The Act provides that the Commissioner may specify any day, past present or future, for when the exemption is to apply, but Commissioner's Practice PT 3.0 says that 'generally' the Commissioner will only apply the exemption from the first day of the financial year in which the application is made.
The Tribunal concluded that Commissioner's Practice PT 3.0 did not reflect the unfettered nature of the Commissioner's discretion to fix a date and that it did not specify the circumstances under which a particular date would be applied. The Tribunal therefore considered the applicant's application on the basis of the discretion provided under the Act.
The Tribunal concluded that the appropriate starting point was that the exemption should come into force from the financial year in which it is granted and then consider whether there are circumstances which would dictate that another date is more appropriate. The applicant did not provide any other circumstances which could be taken into consideration and accordingly the Tribunal found that the Commissioner's decision was the correct and preferable one. Accordingly, the Tribunal upheld the Commissioner's decision and dismissed the applicant's application.
Category: B
Representation:
Counsel:
Applicant : Ms J Batrouney QC and Ms A Lee
Respondent : Ms R Panetta
Solicitors:
Applicant : PricewaterhouseCoopers
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27
Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378
Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2013] WASAT 107
Chamber of Commerce and Industry of Western Australia (Inc) v Commissioner of State Revenue [2012] WASAT 146
Hoar and Commissioner of State Revenue [2007] WASAT 83
Minister for Aboriginal Affairs & Anor v Peko-Wallsend Limited & Ors (1986) 162 CLR 24
NEAT Domestic Trading Pty Ltd v AWB Limited (2003) 216 CLR 277
Quark Technologies Pty Ltd & Anor v Workcover (1998) 70 SASR 153
Introduction
1 On 20 December 2012, the applicant (AMEC) applied to the respondent (Commissioner) for an exemption from liability to payroll tax on the ground that it is a 'charitable body or organisation as defined in the Payroll Tax Assessment Act 2002 (WA) (PT Act). The Commissioner on 6 September 2013 granted the exemption and specified in the notice that this exemption came into operation on 1 July 2012. The Commissioner informed AMEC that '[a] reassessment for the period commencing 1 July 2012 will shortly issue.'
2 On 5 November 2013, AMEC objected to the Commissioner's decision, not on the basis of the granting of the exemption, but on the basis that AMEC considered that the exemption should come into operation on an earlier date than the one specified by the Commissioner.
3 The Commissioner on 18 November 2014 disallowed the objection and AMEC then applied to the Tribunal under s 40(1) of the Taxation Administration Act 2003 (WA) (TA Act) for a review of the Commissioner's decision.
Facts
4 When the matter came before the Tribunal for directions on 4 February 2015, the parties were ordered to file, amongst other things, an agreed statement of facts. The statement was filed on 4 March 2015 and these are the agreed facts:
1) On 11 December 2012, the Commissioner published a policy relating to the commencement date of an exemption from liability granted to a charitable body or organisation under s 41(2) of the PT Act. The policy is entitled 'Commissioner's Practice PT 3.0' and stated, amongst other things, that:
The practice applies to applications for exemption received on or after 11 December 2012.
2) In a letter dated 20 December 2012 (December Letter) AMEC through PricewaterhouseCoopers (PwC) applied to the Commissioner for exemption from liability to payroll tax pursuant to s 41(1) of the PT Act, on the basis that it is a 'charitable body or organisation' and that the wages paid or payable by it are for work of the kind ordinarily performed in connection with a charitable purpose for which AMEC is established or carried on within the ambit of s 40(2)(n) of the PT Act.
3) In the December Letter, AMEC through PwC also requested a refund in respect of any payroll tax paid in the last five financial years, purportedly under s 54 of the TA Act.
4) In a letter dated 6 September 2013 (September Letter) the Commissioner gave notice to AMEC exempting it from liability to payroll tax pursuant to s 41(2) of the PT Act, on the basis that the Commissioner was satisfied that AMEC was a 'charitable body or organisation' in accordance with the meaning given to that term in the Glossary to the PT Act.
5) The September Letter stated that:
Under s 41(4) of the [PT Act], the exemption applies from 1 July 2012. This is in line with Commissioner's Practice PT 3.0 which limits the operation of the exemption to the commencement of the assessment year in which the application is made.
6) In a letter from PwC dated 5 November 2013 (November Letter), AMEC through PwC objected to the Commissioner's decision to apply the exemption from 1 July 2012, rather than 1 July 2008.
7) AMEC's grounds of objection were stated as follows:
Ground 1: We object to the Commissioner restricting the effective date of the notice issued under s 41(2) of the [PT Act] to 1 July 2012.
Ground 2: We object to the Commissioner's [decision set out in the September Letter] to restrict the refund of payroll taxto 1 July 2012.
8) By letter dated 18 November 2014, the Commissioner notified AMEC of its decision to disallow the objection.
9) AMEC applied to the Tribunal for a review of the Commissioner's decision by way of an application dated 12 December 2014.
10) AMEC says that it is, and has been since 1 July 2008, a 'charitable body or organisation' within the ambit of the meaning of that term as set out in the Glossary to the PT Act.
11) The Commissioner does not dispute that assertion.
The statutory framework
Payroll Tax Assessment Act 2002 (WA)
5 The liability to payroll tax is imposed by s 7 of the PT Act. Section 7(1) of the PT Act provides that an employer who pays or is liable to pay WA taxable wages is liable to pay any payroll tax payable on the wages.
6 'WA taxable wages' are wages, other than exempt wages, that are taxable in Western Australia; s 5(2) of the PT Act.
7 Wages are taxable in Western Australia if the wages are paid or payable by an employer for or in relation to services performed by a person wholly in Western Australia; s 6A(1)(a) of the PT Act.
8 Section 26(1) of the PT Act relevantly places an obligation on an employer who is registered to lodge a return for each month specifying the amount of taxable wages paid or payable by an employer during the month (unless the employer is exempted from lodging monthly returns under s 29 of the PT Act, which AMEC was not).
9 AMEC was registered as an employer for the purposes of the PT Act prior to its application for exemption from payroll tax made on 20 December 2012.
10 Other than for the month of June, the monthly return must be lodged within seven days after the end of the month (or within any further time allowed by the Commissioner in a particular case); s 26(3)(a) of the PT Act.
11 The June monthly return must be lodged within 21 days after the end of the month (or within any further time allowed by the Commissioner in a particular case); s 26(3)(b) of the PT Act.
12 Payroll tax is due for payment on the last day for lodging the return of the wages on which the payroll tax is payable; s 6 of the PT Act.
13 Exempt wages are wages that are exempt from payroll tax under Pt 5 of the PT Act. The definition of 'exempt' in relation to wages is in the Glossary to the PT Act. Section 40 is within Pt 5.
14 Section 40 of the PT Act exempts certain categories of wages including 'wages paid or payable during an assessment year … by a charitable body or organisation exempted under s 41 for doing work of the kind ordinarily performed in connection with a charitable purpose for which the body or organisation is established or carried on'.
15 Section 41 of the PT Act applies specifically to charitable bodies or organisations. Section 41(1) of the PT Act provides that a charitable body or organisation may apply to the Commissioner for exemption from liability to payroll tax.
16 Section 41(2) of the PT Act then empowers the Commissioner to exempt a charitable body or organisation from liability to payroll tax by giving an exemption notice to the charitable body or organisation.
17 The exemption comes into operation on the day specified in the notice, which may be the day on which the notice is given, or an earlier or later day; s 41(4) of the PT Act.
18 For completeness, I note that the PT Act was amended in 2015 to include a new subsection in s 41, namely s 41(5) which provides:
The day on which an exemption given by the Commissioner under subsection (2) comes into operation under subsection (4) cannot be earlier than
(a) if the charitable body or organisation is registered, or has at any time been registered, the commencement of the assessment year during which the application for the exemption was made; or
(b) otherwise, the commencement of the assessment year that is 5 years before the assessment year in which the charitable body or organisation was first found by the Commissioner to be liable to payroll tax.
Taxation Administration Act 2003 (WA)
19 Section 34 of the TA Act allows a taxpayer the right to object to an assessment or another decision made by the Commissioner under, relevantly, the PT Act that affects the taxpayer's liability to taxation.
20 The Commissioner must consider and determine an objection; s 37 of the TA Act. Time limits apply.
21 Under s 40 of the TA Act, a person dissatisfied with the Commissioner's decision on an objection may apply to the Tribunal for a review of that decision.
22 Section 16 of the TA Act states:
Reassessments
(1) The Commissioner must make a reassessment
(a) if specifically required to do so under a taxation Act; or
(b) if specifically required to do so under a direction given in the course of review proceedings; or
(c) if a taxation Act provides for a rebate or refund of tax in particular circumstances, and the circumstances were not taken into account when the previous assessment was made.
(2) Subject to subsection (5), the Commissioner may also make a reassessment
(a) on his or her own initiative, if it appears that a previous assessment is or may be incorrect for any reason; or
(b) on the application of the taxpayer.
(3A) Despite subsections (1) and (2), the Commissioner cannot make a reassessment in relation to an interim assessment unless specifically required to do so by section 39(1) or a direction given in the course of review proceedings.
(3B) A reference in this Act to an assessment following an interim assessment does not include a reference to a reassessment of an interim assessment.
(3) A reassessment may be made whether or not any amount of tax has been paid on the previous assessment.
(4) A reassessment may consolidate 2 or more separate assessments into a single assessment.
(5) If an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
23 Section 54 of the TA Act states:
Refunds
(1) The Commissioner must refund tax to a taxpayer if
(a) as a result of a reassessment, it appears that an overpayment of tax has been made; or
(b) the Commissioner is satisfied on an application for a refund under this section that an overpayment of tax has been made; or
(c) in the circumstances of a particular case, the Commissioner is required by a taxation Act to make a refund of tax.
(2A) If the tax paid on an interim assessment exceeds the tax payable on the assessment following the interim assessment, the Commissioner must refund the taxpayer these amounts
(a) the difference between the tax paid on the interim assessment and the tax payable on the assessment following the interim assessment;
(b) interest, calculated at the prescribed rate, on the amount referred to in paragraph (a) during the period
(i) beginning on the date on which the amount referred to in paragraph (a) was paid by the taxpayer; and
(ii) ending on the date on which the Commissioner approves the refunding of that amount.
(3) An application for a refund may only be made
(a) on a ground on which refunds are authorised or required by a taxation Act; or
(b) on the ground that the amount paid by the taxpayer exceeds the amount of tax payable in accordance with the relevant assessment.
(4) An application for a refund under this section must be made
(a) within a period fixed by a taxation Act for making the application; or
(b) if no period is fixed by a taxation Act within 5 years of the date when the overpayment was made.
Practices
(1) The Commissioner is to publish all existing practices relating to the assessment of tax.
(2) The Commissioner cannot establish or direct a practice to be observed unless the Commissioner first publishes that practice.
State Administrative Tribunal Act 2004 (WA)
25 These proceedings fall within the Tribunal's review jurisdiction in accordance with s 17 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The review is therefore to be by way of hearing de novo; s 27(1) of the SAT Act.
26 The Tribunal has all the functions and discretions corresponding to those exercisable by the decisionmaker in making the reviewable decision; s 29(1) of the SAT Act. The role of the Tribunal is to make the correct and preferable decision at the time of the decision under review.
Commissioner's Practice PT 3.0
27 The Commissioner's published practice relevant to this matter is Commissioner's Practice PT 3.0. It is entitled 'Payroll Tax Commencement date of an exemption from liability granted to a charitable body or organisation'.
28 The opening words of PT 3.0 are as follows:
This Commissioner's practice explains the commencement date that will generally be applied to an exemption from liability to payroll tax that is granted by the Commissioner to a charitable body or organisation under the provisions of the [PT Act].
29 Under the heading 'Background', PT 3.0 relevantly provides:
Pursuant to section 41(1) of the [PT Act], a charitable body or organisation may apply to the Commissioner for exemption from liability to payroll tax.
Section 41(2) of the [PT Act] then provides that the Commissioner may, by giving notice to the charitable body or organisation, exempt it from liability to payroll tax.
Pursuant to s 41(4) of the [PT Act], the exemption comes into operation on the day specified in the notice. This day may be the day on which the notice is given or an earlier or later date.
30 The background information then goes on to explain that, where an exemption is granted to a charitable body or organisation, the body or organisation may apply for a reassessment in respect of any selfassessments it has made after the day the exemption comes into operation. A selfassessment is an assessment made by a taxpayer in a return. Under s 16(2)(b) of the TA Act, the Commissioner may make such a reassessment. The Commissioner will then refund tax to a taxpayer under s 54(1)(a) of the TA Act if it appears that an overpayment of tax has been made.
31 PT 3.0 then sets out the Commissioner's practice and, in the case of a charitable body or organisation that is registered as an employer under the provisions of the PT Act and making selfassessments of payroll tax, the practice is this:
Where a charitable body or organisation that is registered as an employer under the provisions of the [PT Act] is granted an exemption from liability to payroll tax, the exemption will come into operation on the first day of July in the assessment year in which the application for exemption is received.
32 PT 3.0 also deals with the commencement date that will be applied to an exemption granted to a body or organisation that has not been registered as an employer under the provisions of the PT Act. It is not in dispute that AMEC is a body or organisation that is registered as an employer. However, it is of interest to note that in the case of a body or organisation that is not registered, if an exemption from liability to payroll tax is granted to a body or organisation on the basis of being charitable, the exemption will apply in effect for the five financial years up to the date of the exemption or the beginning of the financial year in which the body or organisation became charitable, whichever is the later.
The issues
33 There is little in dispute between the parties other than the question of whether the Commissioner, in the circumstances, should have allowed the exemption in question to come into operation on an earlier date than the one specified.
34 AMEC considers that the task of the Tribunal is to make the 'correct and preferable decision' in respect of the date of commencement of the exemption. AMEC's position is that the day should be at least 1 July 2007, being the first day of July five years before the application for exemption was received, as permitted under the TA Act.
35 The Commissioner agrees that the primary issue for consideration is whether the Commissioner made the correct and preferable decision in issuing a notice under s 41(2) of the PT Act exempting it from liability with an effective date of 1 July 2012.
36 The Commissioner says that the subissues that then arise are:
a) Whether the Commissioner was entitled to adhere to his policy and apply it in accordance with its terms.
b) Does AMEC have the right to an assessment for the period 1 July 2008 to 30 June 2012 under s 16 of the TA Act?
c) Does AMEC have a right under s 54 of the TA Act to be refunded tax paid in respect of the period 1 July 2008 to 30 June 2012?
d) Is the Commissioner bound to follow the decision of the Tribunal of Chamber of Commerce and Industry of Western Australia (Inc) v Commissioner of State Revenue [2012] WASAT 146 (CCI 2012 decision) and issue a refund in respect of the time period from 1 July 2008 to 30 June 2012?
37 Incidentally, at the hearing of this matter on 20 April 2015, AMEC informed the Tribunal that the references in its application and written submissions to 1 July 2008 as the date upon which it considers the exemption should apply, should have been the date 1 July 2007. The Commissioner took no exception to that (T:33; 20.04.15). I will proceed on that basis.
The evidence of Mr Clayton Mark Cox
38 The Commissioner filed a witness statement from Mr Clayton Mark Cox on 11 March 2015.
39 Mr Cox has been employed by the Western Australia Office of State Revenue (OSR) since 5 October 1988 and since 2013 has held the position of Assistant Director Review, which he says gives him responsibility for the daytoday management of the review section of the OSR.
40 Mr Cox says in his statement that, with effect from 1 July 1997, the Commissioner was given the responsibility of granting exemptions from payroll tax liability to charitable bodies or organisations upon their application and a discretionary power relating to the commencement date of that exemption.
41 He says that from 1997 until April 2011, the Commissioner's approach when considering the relevant date from which the exemption is to apply is that a charitable exemption would generally commence from a date which would neither result in any assessment of unpaid payroll tax, nor in any reassessment of tax liabilities that had been paid in respect of periods prior to the date of the application.
42 Mr Cox says that between July 1997 and April 2011, the Commissioner received 10 applications for exemption by charitable bodies or organisations. All 10 applicants were, at the time of their respective applications, registered for and had paid payroll tax. In none of these cases was the exemption backdated to any material extent.
43 In the case of one application, the fifth of the 10, received in 2003, the applicant in that case applied for a reconsideration by the Commissioner of that decision. This was 'denied on the basis that there was no circumstance that would warrant treating the applicant in a different manner to the manner in which other applicants had been treated'; Exhibit B paragraph 14.
44 The sixth application, received in July 2004, led to an exemption being granted, but to apply prospectively only. Again, following submissions from the applicant in that case, Mr Cox says that the 'commencement date of the exemption was backdated to 1 July 2002 (being the date that the applicant first commenced paying wages), and a reassessment and refund of payroll tax for the period 1 July 2002 to 30 June 2004 was carried out'; Exhibit B paragraph 15.
45 The seventh application, received in January 2009, resulted in an exemption being given and backdated to 1 January 2005, being the date from which the applicant was liable for payroll tax. However, Mr Cox says that was due to an 'officer error' and 'contrary to a written instruction that the exemption ought to be approved with effect from 1 January 2009'; Exhibit B paragraph 16.
46 The eighth, ninth and tenth applications for exemption were all granted, to take effect from 1 July in the financial year in which the applications were made.
47 Mr Cox says that when the Commissioner received a further application for exemption in April 2011, from an organisation that was at the time registered for payroll tax, the question was raised as to why the exemption should not commence on a date five years prior to the date of the application. This led to a discussion within the OSR about the Commissioner's policy, following which it was concluded in December 2011 that the policy position should be amended. With effect from and including the April 2011 application, charitable exemptions would generally be effective from the later of the date on which the employer began paying wages in Western Australia or the beginning of the financial year, five years prior to the making of the application.
48 All applications for exemption received between April 2011 and December 2012 were granted and backdated in accordance with that new policy.
49 Mr Cox says that in July 2012, when the Tribunal handed down the CCI 2012decision, the Commissioner's policy decision again came under further discussion. He says that it was thought that the existing policy did not take into account 'the manner in which the [PT Act] had been drafted to specifically treat exemptions for wages paid by charitable bodies or organisations differently to the exemptions for wages paid by other types of employers, and had not had sufficient regard to the reasons for that differential treatment'; Exhibit B paragraph 41. Mr Cox says that, following the publication of the CCI 2012 decision 'the Commissioner resolved that he should publish his policy relating to the commencement date of charitable exemptions so as to clarify that the Commissioner's starting position is that, in the absence of exceptional circumstances, a charitable exemption will commence from the beginning of the financial year in which the application. [sic]'; Exhibit B paragraph 43.
50 Mr Cox then says that on 11 December 2012, the Commissioner published the Commissioner's Practice PT 3.0 and this policy has been considered in relation to all applications received since 11 December 2012.
51 Since the publication of Commissioner's Practice PT 3.0, Mr Cox says that the Commissioner has approved 12 applications for exemption from charitable bodies or organisations that were registered for payroll tax at the time of making the application. In 10 of those cases, the exemptions were granted with effective dates of the beginning of the financial year in which the applications were made.
52 In the first of the two exceptions, the exemption was given an earlier commencement date, to commence from the date when an earlier application from the same applicant had been refused.
53 In the second exemption, the application was originally received from a parent entity of the charitable body or organisation in question. The charitable body or organisation itself subsequently made an application in its own name for an exemption and the Commissioner treated that application as having been made on the date when the parent entity made its application, in July 2012.
54 In the case of that application, the Commissioner applied the Commissioner's then policy which was briefly in force in July 2012. The exemption was therefore backdated for five years.
55 Under crossexamination, Mr Cox said that the Commissioner treats differently, on the one hand, applicants for exemption who were not registered for payroll tax at the time of the application and, on the other, applicants who had previously been paying payroll tax and then subsequently applied for the exemption. He said that the Commissioner's view was that you had 'governments that didn't want people who were found to be charitable and had not been registered to be given back assessments. So there was, I guess, a conflict' (T:11; 20.04.15). In those circumstances, the Commissioner would backdate the exemption for five years. This is in contrast to a taxpayer who had actually registered for and paid payroll tax and then sought a repayment of that tax.
56 Mr Cox conceded that there was 'nothing in the legislation that justifies the Commissioner's current position in restricting refunds to one year' (T:20; 20.04.15).
The Tribunal's deliberations
57 It is not in dispute between the parties that AMEC was at the date of the relevant decision a charitable body or organisation within the meaning of the PT Act. The Commissioner's decision to exempt AMEC under s 41(2) of the PT Act from liability to payroll tax is not under review.
58 It is also not in contention that AMEC has been at all relevant times such a charitable body or organisation (T:29; 20.04.15). The only question before the Tribunal is whether the Commissioner, when granting that exemption, should have granted it with effect from the day on which the exemption was given or on an earlier or later day.
Commissioner's Practice PT 3.0
59 It is not unlawful for a repository of statutory power to adopt a general policy for the purposes of dealing with numerous cases or applications, to ensure that the power is consistently exercised by reference to relevant considerations; NEAT Domestic Trading Pty Ltd v AWB Limited (2003) 216 CLR 277 (NEAT) at [137].
60 However, adopting any method for making a discretionary decision, including the use of a legally permissible policy, does not relieve the decisionmaker of the need to consider the individual circumstances of each application that comes before it. The reasons that lie behind this requirement of individual decision-making are clear. If the Parliament had intended a common rule to apply, it would have said so to the extent that that would be constitutionally valid; NEAT at [138].
61 Under s 127 of the TA Act, the Commissioner is to publish all existing practices relating to the assessment of, relevantly, payroll tax and cannot establish or direct a practice to be observed unless that practice is first published.
62 The Tribunal has consistently noted in the past that the existence of fair and transparent policies and procedures is desirable in the case of policies that seek to provide equity and consistency amongst all taxpayers. I see no reason to depart from this view. As Debelle J said in Quark Technologies Pty Ltd & Anor v Workcover (1998) 70 SASR 153 (Quark) at 164:
It is, however, lawful for an authority to adopt a policy governing the exercise of discretion provided that it is prepared to depart from that policy in appropriate cases (citations omitted). As Lord Reid said in British Oxygen Co Limited v Board of Trade [1971] AC 610 at 625:
'The general rule is that anyone who has to exercise a statutory discretion must not ''shut his ears to an application'' … I do not think there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all.'
64 In Minister for Aboriginal Affairs & Anor v Peko-Wallsend Limited & Ors (1986) 162 CLR 24, Mason J said at 39 40:
What factors a decisionmaker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhausted or merely inclusive. If the relevant factors and in this context I use this expression to refer to the factors which the decisionmaker is bound to consider are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act.
The subject matter, scope and purpose of s 41 of the PT Act
65 In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46 47 the plurality said:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of the legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
66 Determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials; Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at [25].
67 An exemption from payroll tax liability for charitable bodies or organisations was first introduced in 1984 by s 4 of the Payroll Tax Assessment Amendment Act 1984 (WA). It was the Minister who was given the responsibility for determining an application for exemption. The Minister was required to publish a notice of the granting of the exemption, which took effect from the date of its gazettal and was therefore not retrospective.
68 In 1997, the responsibility for determining an application for exemption and issuing a written notice to the charitable body or organisation in question was handed to the Commissioner. The Commissioner was also given the power to specify in the notice the day on which the declaration would come into operation, being a day on or after the giving of the notice or any day prior to that day; s 13(3) of the Revenue Laws Amendment (Assessment) Act 1997 (WA).
69 This provision is substantially the same as s 41(4) of the PT Act.
70 The Commissioner says that s 41(4) of the PT Act was not enacted to assist charities in obtaining a refund of payroll tax properly paid in previous years. In fact, the Commissioner says, Parliament specifically intended such an outcome to be avoided by the Commissioner. The Commissioner cites the relevant part of the explanatory memorandum that accompanied the Revenue Laws Amendment (Assessment) Bill 1997 (WA) which said:
The lack of a mechanism to provide an exemption retrospectively has caused problems in the past for charitable institutions which have paid wages in excess of the threshold but have failed to register and pay payroll tax.
In such circumstances, the Commissioner is required to assess the institution's liability up to the date of exemption which inevitably leads to claims for ex gratia payments by charitable institutions which are unable to meet their obligations.
The amendments propose that any exemption should apply from a date specified by the Commissioner.
However, to prevent claims for refunds by charitable institutions which may have been registered and paying pay-roll tax for some time, it is proposed that there should be no right of objection to any decision by the Commissioner not to apply an exemption retrospectively.
71 Just how the inclusion of what was then s 41(5) of the PT Act, which provided that the Commissioner's decision as to the day on which the charitable exemption comes into operation was nonreviewable, would 'prevent claims for refunds' is unclear. The Commissioner had the power to specify any day for the exemption to take effect, irrespective of whether the applicant concerned was registered or unregistered. It was not until 2015 that s 41 of the PT Act made any distinction between registered and unregistered entities.
72 In any event, the then s 41(5) of the PT Act was repealed in 2004. From that date the Commissioner's decision as to the day on which the exemption comes into operation became reviewable under the TA Act.
73 I have already noted earlier in these reasons that Commissioner's Practice PT 3.0 deals expressly with the commencement date that will be applied to an exemption to a body or organisation that has not been registered as an employer under the provisions of the PT Act. Commissioner's Practice PT 3.0 essentially provides that, in those circumstances, the exemption will apply in effect for the five financial years up to the date of the exemption.
74 I do not need to comment further on that aspect of PT 3.0, although it does appear to reflect an intention of the Parliament in the case of unregistered entities.
75 However, there is nothing from any of the materials provided to me to indicate that the Parliament intended to place any restrictions on how the Commissioner exercised his discretion in the case of registered entities. I conclude that, in the case of registered charitable organisations which have paid payroll tax and subsequently sought an exemption, by legislating that the Commissioner could specify any day, past, present or future, the Parliament had no expectation that the Commissioner would exercise that discretion in any particular way. In my opinion, the Commissioner's discretion was at the relevant time entirely unfettered, either by the provisions of the PT Act or otherwise.
76 I do not accept the Commissioner's contention that the word 'generally' when it appears at the beginning of Commissioner's Practice PT 3.0 indicates a preparedness to depart from his practice in appropriate cases. However, even if I am wrong and it can be said that the word 'generally' provides that indication of preparedness, Commissioner's Practice PT 3.0 is silent as to the circumstances under which the Commissioner might depart from his general policy. This is in contrast to, say, what was previously named Commissioner's Practice TAA 1.2 (dealing with remission of penalty tax in whole or in part). Commissioner's Practice TAA 1.2 provided express examples of when no remission of penalty tax will be given, when it will be remitted in part and when it may be remitted entirely. For a discussion of Commissioner's Practice TAA 1.2, see Hoar and Commissioner of State Revenue [2007] WASAT 83.
77 For those reasons, I consider that by following Commissioner's Practice PT 3.0, the Commissioner is not exercising the power conferred on him by s 41(4) of the PT Act. There is nothing in the practice to indicate that the Commissioner will consider the individual circumstances in each case. In particular, the Commissioner has adopted a position, in the case of charitable bodies or organisations registered for payroll tax, where the effective date of the exemption is almost invariably the first day of the financial year in which the application for exemption is made. I do not accept the Commissioner's contention that, since the inception of Commissioner's Practice PT 3.0, the Commissioner 'has departed from the policy in varied circumstances'; Respondent's Reply paragraph 48(c). According to the evidence of Mr Cox, the only exceptions which have been made under the current practice are where the applicant in question had convinced the Commissioner that the application itself should be regarded as having been made on an earlier date. In those cases, the practice was applied in its terms as if the exemption had been granted on the earlier date.
78 The Commissioner is not so restrained by the PT Act which at the relevant time provided the Commissioner with an unfettered discretion to consider the circumstances in each case and elect a commencement date, whether concurrent with, before or after the date of the granting of the exemption.
What is the correct and preferable decision as to the date when the exemption should commence?
79 AMEC says that I should determine its application by following the Tribunal's CCI 2012 decision and deciding that the commencement date for the exemption should be 1 July 2007.
80 In the CCI 2012 decision, Justice Chaney, the then President of the Tribunal, after finding that the applicant in that case is a charitable body for the purpose of the PT Act, referred the matter back to the Commissioner to give notice to the applicant pursuant to s 41(2) of the PT Act. His Honour then went on to say, at [106], that '… there is no reason to deprive [CCI] of the entitlement to an exemption for the whole period in respect of which the exemption is sought', namely five years.
81 I am sure that his Honour had his reasons for coming to this conclusion, but, with respect, I am unable to discern from the CCI 2012 decision what those reasons were. I therefore do not consider that the CCI 2012 decision is authority for the proposition that any exemption granted under s 41(2) of the PT Act should be made retrospective for five years.
82 It is not in contention between the parties that AMEC was for at least five years prior to the granting of the exemption a charitable organisation to which s 41 applies (T:29; 20.04.15). It was therefore open to AMEC at any time to apply under s 41(1) of the PT Act for an exemption. I have not been provided with any reasons why AMEC did not until December 2012 apply for an exemption.
83 AMEC says that the Commissioner ought to have considered that AMEC has met the requirement of being a charitable body or organisation since at least 1 July 2007. Therefore the correct and preferable decision is to specify as the applicable date 1 July 2007 or an earlier date on the basis that AMEC is and has been a charitable body or organisation since at least 1 July 2007; Applicant's Statement of Issues, Facts and Contentions paragraph 21.
84 However, until AMEC made its application under s 41(1) of the PT Act and the exemption was granted, it was properly liable for payroll tax; Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2013] WASAT 107 at [57]. Unlike, for example, a public benevolent institution which is exempt from liability to pay-roll tax by virtue of s 40 of the PT Act, a charitable body or organisation needs to be expressly exempted from liability under s 41. Until the exemption is granted, the body concerned is not exempt. Accordingly, I consider that the charitable status of AMEC prior to its making of an application for exemption is irrelevant to this issue. Most, if not all, entities who are given that exemption would be able to make that argument. If the intention of the Parliament was to apply the exemption from the date the entity could show that it was charitable, the PT Act would have so provided.
85 As I have mentioned previously, the Commissioner's discretion as to the date upon which the exemption comes into operation is unfettered. The PT Act says that the exemption comes into operation either on the day when the exemption notice is given or on an earlier or later date. In my opinion, therefore, the appropriate starting point is that the exemption will come into force on the date upon which it is granted (or, for ease of administration, the first day of the financial year upon which the exemption is granted). At that point, it is then necessary to consider whether there are circumstances to dictate that another date is more appropriate.
86 It is unnecessary in this case to consider what those circumstances might be, simply because AMEC has not specified what it considers those circumstances are. AMEC's argument is entirely based on what it regards as the precedent set by the CCI 2012 decision and the fact that AMEC has met the requirement of being a charitable body or organisation since at least 1 July 2007. I have already dealt with those two points.
87 Accordingly, it is my conclusion that the date fixed by the Commissioner, 1 July 2012, is the correct and preferable decision.
Order
1. The application is dismissed.
I certify that this and the preceding [87] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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