Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue

Thomas and Naaz Pty Ltd (the taxpayer) appealed to the Court of Appeal of the Supreme Court of New South Wales against a decision of the Administrative and Equal Opportunity Division of the NSW Civil and Administrative Tribunal (NCAT). The dispute concerned whether payments made by the taxpayer to medical practitioners operating at its medical centres constituted taxable wages for the purposes of payroll tax. The taxpayer argued that these payments were not wages, while the Chief Commissioner of State Revenue contended they were.

The primary legal issue before the Court of Appeal was whether the payments made by the taxpayer to medical practitioners, which represented 70% of the Medicare benefits collected by the taxpayer on behalf of the practitioners, were deemed to be taxable wages under the *Payroll Tax Act 2007* (NSW). This required the court to determine whether the medical practitioners were supplying services to the taxpayer, and if the payments were made for or in relation to the performance of work under a relevant contract, as defined by the Act. A further question arose as to whether a prior NCAT determination that the medical practitioners supplied services to the taxpayer, as well as to their patients, raised any question of law.

The Court of Appeal applied the principles of statutory interpretation to the *Payroll Tax Act 2007*. It considered the nature of the contractual arrangements between the taxpayer and the medical practitioners, focusing on whether the payments were remuneration for services rendered to the taxpayer. The court found that the payments made by the taxpayer to the medical practitioners were not wages, as the practitioners were not employees of the taxpayer, nor were the payments made for services rendered by the practitioners to the taxpayer. Instead, the payments represented the practitioners' share of the Medicare benefits they earned from treating patients, after the taxpayer deducted its service fee. The court also held that the prior NCAT determination did not give rise to a question of law that warranted leave to appeal.

The Court of Appeal dismissed the summons filed by the taxpayer seeking leave to appeal, with costs.