Synchron victorious on commissions, fees and payroll tax
Life/risk-focused dealer group, Synchron is claiming a payroll tax victory with respect to arguing against the inclusion of commissions and other fees collected on behalf of advisers.
Synchron director, Don Trapnell, has claimed the victory with respect to a long-running argument with the Victorian State Government's State Revenue Office (SRO), which had assessed that the dealer group was liable to pay payroll tax in relation to the commissions and fees it collects on behalf of some of its advisers.
He said the SRO's assessment was that authorised representatives who do not employ two or more people were considered employees or relevant contractors for payroll tax purposes — something which had significant implications for Synchron and for licensees across the industry.
The assessment meant that potentially all licensees would be liable to pay around five per cent payroll tax on the gross revenue of these authorised representatives, backdated seven years.
"It would have meant a huge tax bill for licensees and had the potential to send smaller licensees broke," Trapnell claimed.
Synchron argued that its legal obligation to collect fees and commissions on behalf of authorised representatives, coupled with the fact that Australian financial services licensees are also legally required to provide other functions such as compliance, education and training, meant these authorised representatives were not employees or relevant contractors for payroll tax purposes.
The breakthrough in the case came for Synchron when, following the submission of key documentation to the Victorian Supreme Court, the SRO formally acknowledged the dealer group's position.
A letter from the Revenue Office to Synchron's legal representatives stated: "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".
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