The family of late Multiplex founder John Roberts is among the winners from three long-running tax disputes that have gone to the courts – and all decided in favour of the taxpayers.
The family of late Multiplex founder John Roberts is among the winners from three long-running tax disputes that have gone to the courts – and all decided in favour of the taxpayers.
The Roberts family is in line for a $3 million-plus stamp duty refund from the state Treasury after winning the latest round in its three-year legal battle.
Kenwick couple Jennifer and Peter Rowson have also had a win over Treasury after arguing that their hairdressing and electrical contracting businesses should not be grouped together for payroll tax purposes.
In a third matter, the state government has announced plans to change the tax laws to reverse the ongoing impact of a recent stamp duty win by Origin Energy.
Of all these matters, the Rowson case is likely to be most widely relevant to the WA business community because it clarifies the use of grouping provisions for payroll tax.
In a judgement handed down this week, the Court of Appeal upheld an earlier ruling by the State Administrative Tribunal, which had rejected the Commissioner of State Revenue’s tax assessment.
Wilson & Atkinson partner Daniel Romano, who represented the Rowson family, said the appeal court ruling solidified the original decision in the tribunal.
“If the commissioner was able to group all husband and wife businesses together, it would have put a burden on many businesses,” Mr Romano said.
The dispute arose in 2003 after the commissioner decided that Mrs Rowson’s hairdressing business, owned by Artistic Pty Ltd, should be grouped with Mr Rowson’s electrical contracting business and with a family trust.
If the businesses were grouped together, Artistic would be deemed liable for payroll tax, but on its own fell below the payroll tax threshold.
The commissioner’s assessment was based on various links between the companies, but the SAT concluded that the business were separate.
The commissioner appealed this ruling; however, the appeal court endorsed the SAT ruling after being unable to find any flaws in its assessment.
The Roberts case related to the December 2003 stock market float of the Multiplex construction group, and revolved around the definition of unlisted securities.
The commissioner assessed that $3.2 million in stamp duty was payable. This was endorsed by the SAT but has been overturned by the Court of Appeal.
The ruling is academic for future matters, since stamp duty on unlisted securities was abolished in WA with effect from January 1 2004.
Meanwhile, the state government has announced plans to amend the Stamp Act, with immediate effect, after Origin Energy successfully challenged a $3 million stamp duty assessment.
The proposed amendments relate to the controversial ‘land rich’ provisions, which have resulted in mining companies, power generators and other businesses having to pay stamp duty when they acquire assets in Western Australia.
The ‘land rich’ provisions were originally designed to stop property owners transferring their assets into a company structure prior to sale, to avoid stamp duty, but in practice have captured many other businesses.
The dispute stemmed from a $2.97 million stamp duty assessment, plus penalty tax of 100 per cent, on Origin’s 2002 acquisition of Fletcher Challenge South-West Co-Generation Ltd, which held a 50 per cent joint venture interest in a power station at the Worsley alumina refinery near Collie.
The Commissioner of State Revenue concluded that land represented 93.5 per cent of Fletcher Challenge’s total assets (i.e. above the 80 per cent threshold applying at the time) and therefore it was a landholder for the purposes of the Stamp Act.
Freehills partner Nick Heggart said the Multiplex and Origin cases highlighted the complexity of stamp duty and the importance of careful planning.
He added that a complete overhaul of the Stamp Act, currently before parliament, would substantially change the application of stamp duty.
