Bonner v Chief Commissioner of State Revenue

The decision of Bonner v Chief Commissioner of State Revenue [2020] NSWCA 238 involved the Commissioner of State Revenue and the respondents, the agents, contesting whether the agents were liable for payroll tax on their dealings with models. The respondents provided models to clients under contracts and argued that these were not employment agency contracts as defined by the Payroll Tax Act 2007 (NSW). The dispute centred on whether the respondents' contracts with the models were employment agency contracts and whether the models worked in and for the conduct of the clients’ businesses. The Court of Appeal was required to decide the meaning of “employment agency contract” and the extent of the implied limitations on these contracts under the Act.

The Court of Appeal considered whether the literal meaning of “employment agency contract” resulted in absurd consequences, and whether extrinsic materials could be used to interpret the Act. The Court noted that the Act’s definition of employment agency contracts was broad and potentially could encompass various types of service agreements. However, the Court found that the literal interpretation would not necessarily lead to absurd results and that it was not necessary to read down the definition by implied limitations. The Court also rejected the use of extrinsic materials from the repealed Pay-roll Tax Act 1971 (NSW) to interpret the current Act, as it was not permissible to import concepts from repealed provisions. Instead, the Court adopted a purposive construction of the Act, focusing on the purpose of the legislation to tax payroll.

The Court of Appeal held that the contracts between the respondents and the models were indeed employment agency contracts because the models were engaged to provide services to the clients. The Court concluded that the models worked in and for the conduct of the clients’ businesses, as they were integral to the clients’ operations. Consequently, the respondents were liable for payroll tax on the payments made to the models. The Court of Appeal allowed the appeal and set aside the decision of the primary judge, ruling in favour of the Commissioner of State Revenue.