MACMAHON CONTRACTORS PTY LTD and COMMISSIONER OF STATE REVENUE - [2009] WASAT 64

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION: MACMAHON CONTRACTORS PTY LTD and COMMISSIONER OF STATE REVENUE [2009] WASAT 64

MEMBER: JUDGE J ECKERT (DEPUTY PRESIDENT)

HEARD: 1 JULY 2008
FINAL WRITTEN SUBMISSIONS FILED
23 JULY 2007

DELIVERED : 9 APRIL 2009

FILE NO/S: CC 1303 of 2007

BETWEEN: MACMAHON CONTRACTORS PTY LTD
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Pay-roll tax Wages Employee share scheme Contribution day Market value Options Provide Resolution granting option Appropriate disposition of proceedings

Legislation:

Corporations Act 2001 (Cth)
Fringe Benefits Tax Assessment Act 1986 (Cth), s 136
Interpretation Act 1984 (WA), s 9
Pay-roll Tax Assessment Act 2002 (WA), s 4, s 5(1), s 5(2)(a), s 7(1), s 10, s 45, Glossary cl 1, cl 2, cl 6(2), cl 8
Pay-roll Tax Assessment Regulations 2003 (WA), reg 16, reg 17, reg 18
State Administrative Tribunal Act 2004 (WA), s 28, s 29
Taxation Administration Act 2003 (WA), s 40(1)

Result:

Application dismissed

Category: A

Representation:

Counsel:

Applicant: Mr K Shields
Respondent: Mr C Bydder

Solicitors:

Applicant: Ernst & Young
Respondent: State Solicitor's Office

Case(s) referred to in decision(s):

Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534
Lancedale v Heath [1999] NSWSC 609

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

These proceedings related to an application by Macmahon Contractors Pty Ltd for an order that the 'contribution day', for the purposes of calculating the market value of the contribution of options provided to some of its employees under an employee share acquisition scheme, was 3 January 2006. During the proceedings MacMahon Contractors Pty Ltd argued that the relevant contribution day could alternatively be the date on which an employee accepted the offer under the employee share acquisition scheme.
The Commissioner of State Revenue has assessed the market value of the options as at 14 February 2006, being the date that the directors resolved to issue the options to the employees in accordance with each employee's notification of acceptance to participate in the scheme. The Commissioner argued that the options did not come into existence until they were issued in accordance with the scheme rules, and that they could not therefore be valued (with any level of certainty) prior to that date.
The Tribunal accepted the Commissioner's argument and held that the 'contribution day' for the purposes of the Pay-roll Tax Assessment Act 2002 (WA) and the Pay-roll Tax Assessment Regulations 2003 (WA) was 14 February 2006, being the date that the options were first created pursuant to resolution of the directors in accordance with the scheme rules. It was on that date that the options, as represented by their market value as at 14 February 2006, became 'wages' for the purposes of the liability to and calculation of pay‑roll tax.

Issue

The issue identified by the parties for determination by the Tribunal is what the 'contribution day' is for the purposes of calculating the market value of the contribution of options provided to employees of the applicant under reg 17 and reg 18 of the Pay‑roll Tax Assessment Regulations 2003 (WA) (PTA Regulations).

Facts

The applicant is a proprietary company incorporated in South Australia and is a wholly‑owned subsidiary of Macmahon Holdings Ltd (Macmahon), a listed company on the Australian Stock Exchange (ASX).
Macmahon issued a notice dated 7 October 2005 to its shareholders for its 42^nd Annual General Meeting which included a proposed resolution regarding the approval of the 'Macmahon Holdings Limited 2005 Executive Option Scheme' (scheme). The scheme permitted the board of directors to issue options to key executives within the Macmahon corporate group, of which the applicant is a member. The parties agree the scheme is an 'employee share acquisition scheme' for the purposes of reg 16 of the PTA Regulations.
On 11 November 2005, Macmahon issued an announcement to the ASX advising that the shareholders approved the issue of options under the scheme.
Macmahon issued a letter dated 3 January 2006 to various employees of the applicant attaching an application form and instructions to participants in the scheme. A number of employees accepted the offer and delivered a duly completed application form to Macmahon. Under the scheme, the directors had the discretion to alter or amend the scheme at any time. After Macmahon received the completed application forms (closing date being 31 January 2006), options were granted under the scheme by resolution of the directors on 14 February 2006.
As a result, Macmahon issued an announcement to the ASX on 14 February 2006 announcing that it had allotted 12,584,000 options under the scheme to 283 employees of the Macmahon corporate group.
The respondent visited the applicant and undertook a compliance audit. This resulted in the issue of a letter dated 17 October 2006 notifying the applicant that it had been assessed for pay-roll tax in respect of the options issued under the scheme. The respondent issued a pay-roll tax assessment dated 7 November 2006 (assessment). The applicant lodged an objection dated 28 November 2006 against the assessment (objection). In a letter dated 16 May 2007, the respondent requested additional information in the relation to the objection.
On 15 June 2007, the applicant provided the additional information requested. By letter dated 20 June 2007, the respondent disallowed the applicant's objection in relation to the options.
On 17 August 2007, the applicant lodged an application for review by this Tribunal of the respondent's decision on the objection.
The applicant claims that the respondent's decision that the taxable value of the options is $1,002,838 is erroneous as the contribution day used by the respondent in determining the taxable value is incorrect.
The respondent determined the contribution date to be the date when the options were actually allotted or granted by resolution of the directors, as that is the date that the respondent says the options actually came into being (14 February 2006).
The applicant contends that the correct date is either the day when the options were set aside for the individual employees (being the date of the offer, 3 January 2006), or the date when the employee accepted the offer.

A preliminary issue

A preliminary issue for the Tribunal is what the appropriate disposition of this matter would be if the Tribunal considered the respondent erred in his determination of the 'contribution day'.
The applicant applied to the Tribunal under s 40(1) of the Taxation Administration Act 2003 (WA) for review of 'the Commissioner's decision on an objection'. However, the applicant merely seeks a decision (or declaration) that 'the contribution day …. is 3 January 2006.'
The powers of the Tribunal when exercising its review jurisdiction are set out in s 29 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and are to affirm the decision that is being reviewed; vary the decision that is being reviewed, or set aside the decision that is being reviewed; and in any case, make any order the Tribunal considers appropriate.
The real question over which review is sought is the respondent's disallowance of the applicant's objection. As a result, it is appropriate that the disposition of this matter be framed in a way which is consistent with considering that decision under review. For this reason, if the Tribunal grants the application for review, the appropriate order would be that the Tribunal set aside the respondent's disallowance of the objection and, in the absence of submissions as to the consequence of the respondent's error on the taxpayer's liability, to send the matter back to the decision-maker for reconsideration in accordance with the Tribunal's findings as to the contribution day.

Contentions of the parties

Respondent's primary contentions

The central issue of contention between the parties is what is the correct 'contribution day' for the purpose of calculating the market value of the contribution of options provided to employees of the applicant under reg 17 and reg 18 of the PTA Regulations.
The term 'contribution day' is defined in the Glossary of the PTA Regulations in relation to a contribution of a share, unit or right as 'the day on which the contribution is made'. 'Contribution' is not defined by either the Pay-roll Tax Assessment Act 2002 (WA) (PTA Act) or the PTA Regulations.
The dictionary definitions of 'contribution' shed little light upon how the word is to be understood in its context.
The respondent says that the meaning of the word 'contribution' can be discerned from the purpose of the concept of 'contribution day' and the statutory provisions which bear on that purpose. The purpose of determining the contribution day is to permit the market value of the options contributed under the scheme to be calculated under reg 18 of the PTA Regulations. The market value of the options is only relevant to the extent that the options fall within the statutory definition of 'wages' under the PTA Act because until they do, the options are not taxable. Consequently, the contribution day must be the day when the options come within the statutory definition of wages. Further, it follows that the contribution of options must be taken to occur on that day.
The term 'wages' is defined in the Glossary of the PTA Act as:
an amount equal to the value of a fringe benefit or specified taxable benefit that is provided to or in relation to an employee
A 'specified taxable benefit' is a benefit prescribed under s 45(2)(b) of the PTA Act. A contribution to an employee share acquisition scheme, except anything that is otherwise wages under the PTA Act, is a specified taxable benefit for the purpose of s 45(2)(b) of the PTA Act as it is prescribed by reg 16 of the PTA Regulations. An employee share acquisition scheme is:
a scheme by which an employer provides shares, rights to acquire shares, units in a unit trust or rights to acquire units in a unit trust, whether directly or indirectly, to or in relation to an employee in respect of services carried out by the employee;
The respondent says that the options issued under the scheme become wages for the purpose of the PTA Act when they are 'provided to or in relation to any employee'.
The Glossary of the PTA Act defines 'provide' as having the same definition as it does in s 136 of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTA Act):
(a)in relation to a benefit - includes allow, confer, give, grant or perform; and
(b)in relation to any property - means dispose of (whether by sale, gift, declaration of trust or otherwise):
(i)if the property is a beneficial interest in property that does not include legal ownership - the beneficial interest; or
(ii)in any other case - the legal ownership of the property
The definition of provide extends to other grammatical forms such as 'provided': s 9 of the Interpretation Act 1984 (WA).
The applicant agrees that this definition of 'provide' is relevant to determining when the options are contributed to the employee for the purpose of determining the contribution day.
The respondent submits that this definition of 'provide' emphasises the giving or disposal of the benefit or property rather than the mere offering of either of them. It contemplates, he says, actual receipt rather than a future likelihood of obtaining a benefit or property.
The respondent points to r 4.1 of the 2005 Executive Scheme Rules (scheme rules) which provides that a person's entitlement to options is determined at the absolute discretion of the directors and the directors may, in their absolute discretion, grant any number of options as they think fit.
The respondent interprets the general structure of the scheme as being that an offer is made to a person to participate in the scheme and a specific number of options is offered, that the person then must apply for a specified number of options, which may be equal to or less than the number of options offered to the person (r 4.2), and then the options are only granted on a resolution of the directions. The options may only be exercised on certain anniversaries of the grant date, on the satisfaction of certain performance criteria: r 4.2. The directors have discretion to amend the terms of a condition of the scheme: r 6(a).
The respondent argues that the effect of the scheme is that the options are not provided to a person until that third step occurs, that is, when the directors resolve to grant them. The directors cannot make a resolution in respect of a person until they know whether the person has accepted or rejected the offer (either in whole or in part). The respondent says it is only after a person has communicated their acceptance of the offer that the directors can resolve to grant the number of options which have been accepted, and the date of that resolution is therefore the contribution day.
The respondent says that the uncertainty about the number of options to be granted which exists before an offer is accepted is of particular relevance because the definition of wages refers to 'an amount'. 'An amount' is not defined by the PTA Act or PTA Regulations, but the Oxford English Dictionary Online defines the word to mean:
1.The sum total to which anything mounts up or reaches: a. in quantity.
…
b. in number.
…
c. spec. The sum of the principal and interest due upon a loan.
The respondent says that until the specific number of options which had been accepted becomes known, there could be no 'amount' and therefore no 'wages'.
The respondent further argues that both on the terms of the scheme rules and as a matter of practicality, the options can only be said to have been 'provided' within the meaning of the PTA Act and the PTA Regulations when the directors resolve to grant a specific number of options to a particular person. In this case, the relevant resolution was on 14 February 2006, and that is the date of the contribution, being the grant of the options, and as such it is the contribution day and the market value of the options is assessed as at that point of time.
The respondent claims support for his interpretation of 'provide' from the relationship between the definition of 'wages' and the definition of 'employee' in the PTA Act. The respondent points out that the relevant definition of wages in the Glossary to the PTA Act is only one of ten different definitions provided. The respondent argues that it is the only definition which does not use the words 'paid or payable'; all others except cl 2(1)(d) of the Glossary expressly using it, and cl 2(1)(d) using it when read with cl 8 of the Glossary of the PTA Act. As a consequence, in every other definition of wages the amount concerned need not have been paid to constitute wages, it only needs to have been 'payable'.
The respondent says the word 'payable' signifies something which is presently capable of being paid: Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534 at 537. The word 'paid' contemplates that receipt - that is, the giving of the benefit - has been completed. This is in contrast to 'payable', which refers to the right to receive a benefit which has not yet been received.
The respondent submits that a mere offer of options to a person would not be sufficient to render them 'payable' or 'paid' to the person, let alone 'provided'. Options offered to a person under the scheme cannot be said to be 'presently capable of being paid' at the time of the offer because it cannot be known whether the offer will be accepted and, if it is accepted, whether it will be accepted in whole or in part. Consequently the contribution day contended for by the applicant cannot be correct as it is uncertain.
The respondent says the proper conclusion to be drawn from the absence of the words 'paid or payable' in the relevant definition of wages (cl 2(1)(i) of the Glossary of the PTA Act) and in the context of the definition of 'provide' is that in order to constitute wages the options must have been received, paid or provided. The options can only have been received when they are granted by resolution of the directors.

Applicant's primary contentions

The applicant says if the interpretation advocated by the respondent were accepted, the employee would only receive the options when they are exercisable, that is, when the performance hurdles have been met, as at any time the directors could amend the terms and conditions of the operation of the scheme (cl 6(1) of the scheme rules).
In relation to the definition of 'provide' in the FBTA Act, the applicant identifies as a significant issue whether the options provided are a 'benefit' or 'property'.
The applicant submits that the options constitute a chose in action, which is 'intangible property' such that it is 'property' and that the second limb of the definition of 'provide' applies. The applicant contends that it is apparent from the scheme rules that the applicant is making a contractual offer to the employees to participate in the scheme, and relies on Lancedale v Heath [1999] NSWSC 609 at [33]. Thus the applicant identifies the chose in action in this case as the right to enforce the terms of that contract.
The applicant says the central issue is when the chose in action is 'disposed of' pursuant to s 136 of the FBTA Act. The applicant submits that the contribution day for pay-roll tax purposes is the first date when the employee can exercise the chose in action, and that it is irrelevant that the employee may receive a 'better' interest in the property at some point in the future.
The applicant contends that there are two alternatives: the chose in action is provided at the date of the offer, or that it is provided when the contract is formed.
The applicant's primary position is that it is provided at the date of the offer, because although contract law generally recognises that a contract is formed when the offeree communicates acceptance, promissory estoppel prevents a promissee from resiling from a promise or representation. The applicant contends that the employee would have an action for estoppel if the applicant attempted to withdraw the offer before the closing date and that the right given to the employee is an enforceable right in equity under the doctrine of promissory estoppel to have the terms of the scheme applied. The applicant says that at that point (3 January 2006) there is a disposal of the equitable interest in the option to the employee pursuant to that doctrine (and it is therefore 'provided' pursuant to the second limb of that definition in the FBTA Act).
The applicant contends that the respondent misinterpreted the effect of the definition of 'grant date' in the scheme rules – it says the grant date is an arbitrary date set by the applicant for the purpose of determining the dates on which the options may be exercised. On the other hand, the respondent says it is a date chosen by the company and specifically inserted into the scheme rules, and as such is not arbitrary.
In response to the respondent's contention that the options are unable to be provided at the date of the offer as there is uncertainty over the number of options to be granted, the applicant says that there is certainty as the directors have offered a specific number of options to an employee and the number of options offered would be used as a basis for calculating pay-roll tax liability as at the offer date; it does not matter whether or not the employee takes up the offer or whether any or all of the options are subsequently the subject of a resolution by the directors. The market value should be assessed on the total number of options offered under the scheme.

The applicant claims support for this interpretation from ASIC Policy Statement 49 (PS 49). The applicant claims that PS 49 is appropriate as it specifically applies to offers of securities and specifically deals with offers of shares and options under employee share schemes. In particular, PS 49 requires the company when calculating the percentage of the total number of issued shares in the class at the time of the offer to include the number as if all of the offers were accepted or the options under them exercised. The respondent argues that PS 49 is irrelevant.
The applicant says that the contentions of the respondent are not consistent with the respondent's pay-roll tax circular entitled 'Pay-roll Tax Wages Definition' dated June 2005, which uses the word 'allocation'. 'Allocation' has a broader scope to recognise a pay-roll tax liability notwithstanding that the options have not formally been allotted. The applicant submits that it is entitled to rely on the circular as it is a public statement issued by the respondent and it is intended to be used as a guide to assist taxpayers in determining the correct tax position. The respondent says the circular is merely a guide to assist taxpayers and it cannot override the applicable legislation.
In the alternative, the applicant says the contribution day is the date that the offer is accepted, that being the first date on which the employee can exercise the chose in action, as at that date the contract is formed. The applicant says this is consistent with the respondent's contentions that an amount be known and the identity of the person accepting the offer is established. The applicant submits that the fact the directors have not formalised the contract and granted the options under the scheme rules is not relevant as the employees still have a right to enforce the terms of the contract and to require the directors to formalise the contact. The applicant says it would be unconscionable for the directors to not formalise the contract at this stage.
The applicant contends that the respondent's analysis of the words 'paid or payable' is not relevant to the issue of the contribution day as these words are replaced by 'provide' which has a specific definition.

Commissioner's responding submissions

In response to submissions of the applicant relating to the pay-roll tax circular, the respondent says it cannot assist the applicant as the circular has no formal status and is not something that the Tribunal is required to have regard to under s 28 of the SAT Act. Further, the circular says that the information should be used only as a guide. The respondent says that the circular cannot override the proper construction of the relevant legislation.
The respondent also says that the PS 49 is not concerned with, and can be of no assistance in, determining pay-roll tax liability. It is concerned with the operation of the Corporations Act 2001 (Cth), and in particular with its policy on relief from disclosure and licensing provisions in that Act that ASIC provides to employee share schemes; and the offering and sale of securities and other financial products and the provision of related financial services. The treatment of options in PS 49 could not be any different; it is concerned with the offering and sale of securities and must recognise rights to acquire options when an offer is made in order to have any effect.
In regard to the applicant's identification of 'chose in action' as a relevant issue, the respondent says that the applicant does not use the term consistently, on the one hand claiming that the option itself is a chose in action, but then proceeding to consider that the chose in action of relevance is the right to enforce the terms of the contract for the provision of the option.
The respondent argues that the context makes it clear that the focus must be on when the options are provided to the employees and not whether the options are a chose in action, or when some other chose in action is provided.
It is contended by the respondent that the applicant, by implication, in its primary position asserts that a chose in action to enforce the terms of the offer based on promissory estoppel, is sufficient for the option to have been 'provided' to the employee for the purpose of the PTA Act and PTA Regulations. The respondent says that taken at its highest, the chose in action contended for by the applicant is a right by the employee to compel the applicant to abide by its terms of its offer - it does not require the employee to accept the offer and does not constitute an acceptance of the offer or the 'provision' of the options to the employee.
Further, the respondent says that in any case, there would be no chose in action based on promissory estoppel as there could be no certainty as to unconscionability in light of the scheme rules giving the directors absolute discretion in relation to the granting of the options.
In relation to the definition of 'grant date' in the scheme, the respondent says there is nothing arbitrary about the date. Further, the respondent contends that there is nothing in the rules that prevents the directors from resolving to grant options on more than one occasion or which requires options to be granted to employees only one day in any given calendar year. In this context, under the PTA Regulations, the grant date is the contribution day.
The respondent submits that the applicant's contention that the number of options offered is sufficient basis for determining pay-roll tax is incorrect because the employee receiving an offer need not accept any or all of the options offered, and the options are not taxable as wages until they are provided to the employees. The respondent reiterates that the options are not actually provided until the directors resolve to grant them.
The applicant contends that on the respondent's interpretation the relevant date would not be until all the performance criteria had been met because the directors retain a discretion to alter the contract. In reply, the respondent says that he doubts r 6 of the scheme rules could permit the deprivation of the options altogether, and even if it does, the PTA Act and PTA Regulations are concerned with when the options are provided, not with what happens afterwards. This is because the option is taxable when it becomes wages, and it becomes wages only when it is provided to the employee.

Additional submissions

The applicant made further submissions (dated 11 June 2008) followed by the respondent's further submissions (30 June 2008). Both parties made oral submissions at the hearing on 1 July 2008 and these submissions were followed by further written submissions from the applicant (15 July 2008) and the respondent (23 July 2008). Essentially all these submissions restate the applicant's argument that the contribution day is either 3 January 2006, being the date that Macmahon sent the application form to the employees, or alternatively the date of acceptance by the employee because what was 'provided' was a chose in action being a contractual right enforceable in equity and it would be unconscionable if the directors, having offered that right, did not proceed to deal with that right in accordance with the employee's wishes. That right became 'wages' 'provided' on one of those alternative dates. In the additional submissions, the applicant refutes the respondent's arguments and further develops its arguments.
The respondent continues in his additional submissions to rely on his earlier submissions, primarily that the contribution day is the date that the directors resolve to issue the options and that this is the only possible conclusion as a matter of clear statutory interpretation.

Findings

Generally, I agree with the respondent's contentions in these proceedings. It is helpful to go back to basics and consider the context in which the defined term 'contribution day' appears.
Pay-roll tax is a tax payable on wages paid to employees by employers. The liability to pay pay‑roll tax is governed by the PTA Act and calculated pursuant to that Act and the PTA Regulations.
The long title to the PTA Act is 'An Act relating to the assessment and collection of tax on wages paid by employers'.
The term 'contribution day' must therefore be considered in the context of how it relates to the assessment and collection of tax on wages.
Section 5(1) of the PTA Act creates the liability to pay pay‑roll tax on wages that are taxable in Western Australia. Section 5(2)(a) of that Act provides that the following kind of wages are taxable in Western Australia:
wages that are paid or payable for services carried out wholly in Western Australia, irrespective of where the wages are paid or payable[.]
Section 7(1) of the PTA Act provides:
An employer who pays or is liable to pay WA taxable wages is liable to pay any pay‑roll tax payable on the wages.
Section 40 of the PTA Act sets up a scheme of 'exempt wages' and s 45 provides for the making of regulations about a wide range of matters including in s 45(2)(b) 'benefits on the value of which pay‑roll tax is payable' and s 45(2)(f) 'any other matter for the application of this Act to a fringe benefit, a specified taxable benefit or a specified exempt allowance'.
The Glossary to the PTA Act, made under s 4, provides in cl 1 the following relevant definitions:
…
provide, in relation to a fringe benefit or a specified taxable benefit, has the same definition as in section 136 of the FBTA Act [set out in full in the respondent's submissions, above];
…
specified taxable benefit means a benefit prescribed under section 45(2)(b);
…
value -
…
(c)in relation to a specified taxable benefit, has the meaning given in clause 6;
…
Clause 2 of the Glossary to the PTA Act sets out a lengthy definition of wages and relevantly in par (i):
an amount equal to the value of a fringe benefit or specified taxable benefit that is provided to or in relation to an employee …
Clause 6(2) of the Glossary sets out the value of wages paid as follows:
The value of a specified taxable benefit is the prescribed value, or the value calculated in the prescribed manner, as the case requires.
It is then necessary to look to the PTA Regulations to ascertain whether the options under the scheme are 'specified tax benefits' and therefore 'wages' on which tax is paid.
Regulation 16 prescribes that a contribution to an employee share acquisition scheme is:
… a specified taxable benefit for the purposes of s 45(2)(b) of the Act and the definition of "specified taxable benefits" in the Glossary to the Act.
Regulation 17 provides for the determination of the value of contributions to share acquisition schemes and provides that for the purposes of cl 6 in the Glossary to the PTA Act:
(a)if the contribution is a share, a unit or a right to acquire a share or unit – the market value on the contribution day of the share, unit or right as calculated under regulation 18, minus any consideration provided or given for the acquisition of the share, unit or right by the employee for whom the contribution is made[.]
Regulation 18 details how to ascertain the market value of the share unit or right quoted on a recognised financial market on the contribution day.
Finally, the Glossary to the PTA Regulations contains the pivotal definition for contribution day which is defined as:
in relation to a contribution of a share, unit or right, means the day in which the contribution is made.
That Glossary also defines employee to be 'a person to whom wages are paid or payable' and an 'employee share acquisition scheme' as set out above in the respondent's submissions.
Ultimately then, the issue before me is a question of statutory interpretation that requires me to look at the defined term in its context, as part of the scheme of pay‑roll tax payable on wages paid by employers to employees.
Much argument before me revolved around the difference between 'paid' and 'payable' and whether the distinction is relevant to these proceedings and if so whether those terms mean something different from each other. On this point I agree with the applicant that the distinction is not relevant. The PTA Act is an Act related to wages 'paid' (long title) and the definition of 'provide' is in my view, as the respondent argues, couched in terms of something having been allowed, conferred, given, granted or performed, which results in that having been received by the employee. There is no need to draw a comparison with amounts the subject of future payments as there is no element of future payment in the sections and clauses that are relevant to the issue before me. I therefore find that I do not need to make a determination as to the meaning of paid in comparison to the term payable.
The options are the contribution that are made and that are to form part of wages which are taxable, on the basis that they are specified taxable benefits as defined in the legislative scheme. The options can only in all practical and legal terms be created on the date that they are issued by the directors. The contribution date therefore must be the date of the final resolution, being in this case 14 February 2006. Prior to that date, the options do not exist; there is no certainty as to identity of the benefit or quantity. Those characteristics can only be set as at the date that the options are actually created. It does not matter what happens to the options after that date as they fall liable to be taxed on the market value as at the contribution day.
I cannot accept that the respondent's circular overrides the legislation as the applicant proposes. To do so would be to allow the executive to usurp Parliament's role and to amend legislation at its whim.
I also cannot accept that I am bound to apply the ASIC publication PS 49. It can be of no assistance in determining issues of pay‑roll tax liability as it is concerned with the operation of the Corporations Act 2001 (Cth) and ASIC's policy on relief from the disclosure and licensing provisions of the Corporations Act 2001 (Cth) that ASIC gives to employee share schemes and to the offering and sale of securities and other financial products and provision of related financial services. It does not relate to the liability to pay‑roll tax under the State legislative scheme.
I do not agree with the applicant that what is provided is property being a chose in action that the applicant describes as an enforceable right in equity that came into existence on 3 January 2006 (being the date of the offer) under the doctrine of promissory estoppel to have the terms of the employee share scheme applied. The applicant argues that at that point there is a disposal of the equitable interest in the option to the employee pursuant to that doctrine. However, I struggle to see how, within that definition, what is granted can be wages, prior to the offer being taken up by the employee. The benefit or property as it is referred to by the applicant has not yet been created because it is the option that is the subject of the contribution that gives rise to the liability to pay pay‑roll tax. It is not a contractual right that comes within the legislation; it is a right to take up shares, given in the form of an option.
In my view, the respondent is correct in his view that a mere offer of options is not adequate to render them provided to the employee within the meaning of the PTA Act. This is because at that point in time, it is impossible to ascertain whether the offer will be accepted and if so whether it will be accepted in whole or in part. The mere offer of options as contended by the applicant is not adequate to make them provided within the meaning of the legislative scheme.
In my opinion, the applicant lost sight of the critical issue and that was that the 'options' are what was 'provided' and that whether and when they constituted 'wages' had to be determined in order to set the contribution day. No other consideration is relevant. It is, as Mr Bydder, counsel for the respondent, contended, at this point that the argument of the applicant becomes 'infected by that fundamental error'.
It therefore can't reasonably be argued, as the applicant purports to, that where the directors retain an absolute discretion under the scheme rules to amend or withdraw any offer, that it would in all cases be unconscionable to do so. In my view, that notion stretches the bounds of equity too far. It becomes an illusory discretion rather than the absolute discretion intended by the company when the scheme rules were established. I also make the comment with respect to the scheme rules that the applicant cannot seek to rely on them to the extent that they might be inconsistent with the legislation and they cannot in any event override the application of the legislation.
In other respects, I accept the respondent's submissions where the respondent refutes the applicant's contentions. There is no need, in my view, to set all of these out. As mentioned above, the applicant in my view strays from the issue of when the options are granted and whether those options are wages and therefore taxable. It is not a chose in action being a contractual right that is at issue here; it is the grant of the option that is pertinent.
Therefore, for the purposes of the PTA Act and the PTA Regulations, for the option to be treated as 'wages' the scheme of the PTA Act and the PTA Regulations require that the options are granted at the time of the resolution of the directors. It is at that point that they therefore become wages and that date is therefore the contribution day for the purposes of the PTA Regulations.
For these reasons I dismiss the application.

Order

The application is dismissed.

I certify that this and the preceding [92] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUDGE J ECKERT, DEPUTY PRESIDENT