Universal Supermodels Pty Ltd v Commissioner of State Revenue

Universal Supermodels Pty Ltd has appealed against reassessments issued by the Commissioner of State Revenue, following an audit of the appellant's business for the financial years 2009 to 2014. The Commissioner determined that the payments made to the dancers were properly characterised as wages, with penalties and interest imposed on the appellant for late payment. The appellant contends the dancers were independent contractors and not employees. The penalties imposed on the appellant should be remitted to nil if the dancers are found to be employees. The court must determine the nature of the relationship between the appellant and the dancers, and whether the penalties imposed should be remitted.

The court found that the relationship between the appellant and the dancers was that of an employer and employee. The court considered the multifactorial test, including the level of control exercised by the appellant over the dancers, the terms of the dancers' protocol, and the nature of the work performed. The court found that the dancers were subject to a high degree of control by the appellant, including restrictions on their availability, dress, and conduct. The dancers were also paid a fixed rate for their services, with no commercial risk or responsibility in performing at the appellant's club.

The court rejected the argument that the dancers were independent contractors, despite the fact that they had ABNs, operated on a cash-only basis, and were not entitled to superannuation or leave entitlements. The court found that these factors were consistent with the dancers being employees, rather than independent contractors. The court also noted that the outcome of an audit of the appellant's business regarding GST and PAYG withholding tax did not support the appellant's claim that the dancers were independent contractors.

The court found that the penalties imposed on the appellant should not be remitted to nil. The court found that the appellant had failed to take reasonable care in assessing its liability for payroll tax and had not acted in good faith. The court rejected the argument that the penalties should be remitted on the basis that the appellant had complied with the requirements of the adult entertainment code and had obtained ABNs for some of the dancers.

The court orders that the appeal be dismissed and that the appellant pay the costs of the Commissioner. The court will hear the parties as to the form of orders and costs.