Payroll tax threat still looms for licensees

Reflecting on the firm's eventual win in its five-year battle with the State Revenue Office (SRO) in Victoria, Mr Trapnell told delegates to the AIOFP’s offshore conference in Sri Lanka over the weekend that the industry is not yet in the clear.

“We were delighted that, after having previously decided that payroll tax and financial advisers were a natural target, the SRO eventually agreed with our argument that authorised reps are not employees or relevant contractors for payroll tax purposes,” Mr Trapnell said.

“However, because the SRO settled there is still no test case,” he cautioned. “This means if you are a licensee, they will still be able to knock on your door and claim you are liable for payroll tax for authorised representatives, which could put some small licensees out of business.”

Should a licensee find itself in this unenviable position, they should “skip the accountants and go straight to the lawyers”, Mr Trapnell said.

The win came at a cost of “hundreds of thousands of dollars” to the dealer group, he revealed, and required considerable time and attention from senior management, particularly independent chair Michael Harrison who met with stakeholders, including Prime Minister Malcolm Turnbull, during the course of the lobbying campaign.

Mr Trapnell also thanked the AIOFP for its role in supporting Synchron’s efforts.

The Victorian SRO formally communicated its change in tune on 1 June, forwarding a letter to Synchron’s lawyers which indicated the non-aligned licensee would no longer face a bill for “literally millions [of dollars]” due to the imposition of a 5 per cent payroll tax on the gross revenue of authorised reps.

"The commissioner has determined on the basis of evidence 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," the letter stated.

In a video communication announcing the verdict of the dispute to followers, Synchron director John Prossor said it was a “correct and just” outcome, not only for the dealer group and its advisers but also for the “industry at large”.