Australia: Has your charity or NFP overpaid payroll tax?

In a recent development for the not-for-profit sector and charitable bodies, the Western Australian Chamber of Commerce and Industry ("CCI") successfully argued that it was a charity and therefore exempt from payroll tax. Importantly, the Tribunal also held that CCI was entitled to refund of payroll taxes paid going back up to 5 years.

The case was heard in the Western Australian Administrative Tribunal and given that payroll tax legislation in Australian states and territories are largely harmonised, could have precedential value in other Australian jurisdictions.

This case centred on whether the CCI had as its main purpose "other purposes beneficial to the community" which is a test of charitable status. The meaning of a charity stems from very old case law and was not in contention.

• The Commissioner argued that the CCI's main purpose in carrying on its operations was to provide services to its members rather than to benefit the public generally.
• CCI argued that it was established with a charitable purpose, namely, to benefit the general community where its primary object was the "promotion of trade, commerce and industry" and the services provided to members facilitates the benefit to the public.

The tribunal considered CCI's constitution, history, operations, and activities and concluded that CCI was a charity.

This case sets a precedent (although not binding) around the country for NFP's that may have previously decided that they were not entitled to a payroll tax exemption, or NFP's that have made an exemption application but were denied. Ultimately, whether an entity can claim a payroll tax exemption is a question of fact and circumstances and requires an analysis of the entity's objects and operations.

Moore Stephens can help your organisation determine whether you qualify for payroll tax exemption and seek a refund of payroll tax that may have been overpaid. Please contact your Moore Stephens relationship partner if you would like further information.

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