Commissioner of State Revenue v Rojoda Pty Ltd

The Commissioner of State Revenue (the Commissioner) appealed to the High Court of Australia against a decision of the Full Federal Court, which had overturned a decision of a single judge of that court. The dispute concerned the application of payroll tax to payments made by Rojoda Pty Ltd (Rojoda) to its directors. The Commissioner had assessed Rojoda for payroll tax on these payments, arguing they constituted taxable wages. Rojoda contended that the payments were not wages but rather dividends or distributions of profit.

The High Court was required to determine whether payments made by a company to its directors, in their capacity as directors, constituted "wages" for the purposes of the *Payroll Tax Act 2007* (Vic) (the Act). Specifically, the court had to consider whether the payments were made in return for services rendered by the directors in their capacity as directors, or whether they represented a distribution of profits.

The High Court held that the payments made by Rojoda to its directors were indeed "wages" within the meaning of the Act. The court reasoned that the payments were made in consideration for the directors' services in managing and overseeing the company's business, which falls within the definition of "employment" and "wages" under the Act. The court distinguished these payments from dividends, which are distributions of profit to shareholders in their capacity as shareholders. The High Court noted that the directors' remuneration was determined by the company and paid for their ongoing services, irrespective of the company's profitability in any given period.

The appeal was allowed, and the orders of the Full Federal Court were set aside. The court remitted the matter to the Federal Court for further consideration of the assessment.