Synchron has won a lengthy legal battle over the payment of payroll tax on commissions and fees stating it maintained the case over a five-year period for the wider good of the advice sector.
The non-aligned financial advisory group said the legal action, which pitted the group against the State Revenue Office (SRO) Victoria, had cost more than $500,000 but prevented it and other licensees having to pay around 5% payroll tax on the gross revenue of authorised representatives, backdated seven years.
The matter first arose as a result of the Harmonisation of Payroll Tax in Australia in July 2010 which resulted in the removal of a NSW exemption for authorised representatives of Australian Financial Services Licensees (AFSL), at which stage the SRO moved on the issue.
Synchron, Director, Don Trapnell said the SRO had assessed that despite being an AFSL Synchron was still liable to pay payroll tax in relation to commissions and fees collected by the licensee on behalf of its advisers.
In response, Synchron argued that it was legally obliged to collect those moneys on behalf of authorised representatives, and that obligation combined with other legal requirements to provide things such as compliance, education and training demonstrated that advisers were not employees or contractors and thus not subject to payroll tax.
“The SRO’s assessment…would have meant a huge tax bill for licensees and had the potential to send smaller licensees broke.”
“The SRO’s assessment was that authorised representatives who do not employ two or more people are considered employees or relevant contractors for payroll tax purposes,” Trapnell said, adding “It would have meant a huge tax bill for licensees and had the potential to send smaller licensees broke.”
Synchron stated it was awaiting a hearing in the Victorian Supreme Court after referring the matter to the court in February 2014, with a trial set for February 2017.
However, Synchron received word two weeks ago that the case would not go to trial with the SRO writing to the group stating: “The Commissioner has determined on the basis of the evidence presented by your client that your client is correct, to contend that the arrangements between your client and its authorised representatives are not relevant contracts for the purposes of section 32 1(B) of the Payroll Tax Act 2007.”
While Synchron, Director, John Prossor said the this was “…the correct and just outcome from this matter, firstly for Synchron and for its authorised representatives, but also for the industry at large”, the group claimed it received little industry support over the five years while contesting the matter.
Synchron, Independent Chair, Michael Harrison said the group had approached industry bodies and politicians but the latter were unwilling to become involved in any action that would interfere in the collection of state payroll tax.
Having been involved in a similar struggle with the NSW SRO, the industry should be very grateful for the commitment and persistence of Don, John and the Board at Synchron. A great win, well done and thanks on behalf the wider industry.
Well done guys.
Pity you had to do it on your own.
Once again, Synchron have been able to see a problem and cut through the excuses and unreasonable conduct shown by so many.
They have taken the time and expense to put forward the right reasoning and as seems the norm, have had little help from the wider community that has benefited from their hard work.
Thanks Synchcron for what you have done and shame on State and Federal Governments for causing so much unnecessary turmoil and roadblocks.
The SRO just like the ATO are always sniffing around seeking extra $$$$. Rumor has it the SRO also went at Sentry Group for the same thing last year and failed only to try again with Synchron!
Well done Synchron. Going solo can be difficult but principles are always right, even against the ATO & Government. Thank you for standing up for the Life Insurance Industry once again. Fantastic effort & outcome.
What a great effort and a great outcome. Well done Synchron!!!
Fantastic effort – congratulations Synchron!
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