SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue; Ezko Property Services (Aust) Pty Ltd atf the Ezko Unit Trust v Chief Commissioner of State Revenue

The case involved SKG Cleaning Services Pty Ltd and Ezko Property Services (Aust) Pty Ltd, who both operated commercial cleaning businesses, challenging the Chief Commissioner of State Revenue’s assessments of their payroll tax liability. The companies argued that their contracts with clients were not employment agency contracts, as defined by section 37 of the Payroll Tax Act 2007 (NSW), and therefore, they should not be subject to the payroll tax on wages paid to subcontractors and employees. The dispute centred on whether the indicia used to determine when subcontractor and employee works ‘in and for’ the client’s business correctly applied to the plaintiffs' contracts.

The key legal issues before the court were whether the contracts between the plaintiffs and their clients constituted employment agency contracts under the Act and, if so, whether the plaintiffs had discharged their burden of proving that the assessments of their payroll tax liability were excessive. The plaintiffs argued that the indicia used to determine when subcontractor and employee works ‘in and for’ the client’s business were not relevant to their contracts, and therefore, the assessments should be reduced.

The court found that the contracts between the plaintiffs and their clients were indeed employment agency contracts under the Act. It considered the indicia relevant to determining when subcontractor and employee works ‘in and for’ the client’s business and held that these indicia correctly applied to the plaintiffs' contracts. The court further held that the plaintiffs had not discharged their onus of proving that the assessments were excessive. Consequently, the Chief Commissioner’s assessments were upheld.

The court did not order any changes to the assessments. The plaintiffs were still liable for the payroll tax as initially assessed. The decision clarified the application of the indicia for determining employment agency contracts and reinforced the burden of proof on taxpayers challenging payroll tax assessments.