Webinar 4: Grouping Provisions - Payroll Tax

1 Webinar 4: Grouping ProvisionsPayroll Tax WebinarsWebinar OneUnderstanding the basics what it is, how it worksWebinar TwoAllowances, FBT, exemptions and rebatesWebinarThreeContractorsWebinar FourGroupingsAgenda Grouping Provisions background How a group is formed ExclusionsGrouping Provisions Background Deduction based on groups total Australian wagesJoint & several liabilityOne deduction for the groupForming a groupForming a groupRelated bodies corporateUse of common employeesCommon controlTracing of interestForming a groupForming a groupRelated bodies corporateUse of common employeesCommon controlTracing of interestRelated CorporationsHolding/subsidiary relationship under Section 50 of the Corporations Act 2001 One Pty LtdTwo Pty LtdControls composition of board of DirectorsControls >50% of votes at a general meetingHolds >50% of issued share capitalBody corporate is a subsidiary of a holding company of another body corporateThree Pty LtdRelated CorporationsRed Pty LtdPurple Pty LtdBlue Pty LtdGreen Pty LtdOrange

2 Pty LtdBlack Pty Ltd80%100%70%51%60%Forming a groupForming a groupRelated bodies corporateUse of common employeesCommon controlTracing of interestCommon EmployeesPerforms duties solely or mainly for that other businessWorks for another business due to an arrangement between businessesORCommon EmployeesAn employee of one employer performs duties for a business carried on by another personThe sole traders Mr Blue, Mrs Blue and Mr Brownare grouped for Payroll tax BrownMr BlueMrs BlueImages LEGOF orming a groupForming a groupRelated bodies corporateUse of common employeesCommon controlTracing of interestCommon ControlA person, or set of persons together have a controlling interest in two or more businessesCompaniesTrustsPartnershipsSol e TraderIncorporated or unincorporated bodyCommon ControlCompany1 or 2 or more shareholders with >50% of shares with voting rights Majority of Directors common to each businessTrustMore than 50% of units heldAny possible beneficiary of a Discretionary TrustPartnershipEntitlement to >50% profits or capital of the partnershipIncorporation>50% of the board or can control composition of the boardCommon ControlMr BrownCommon ControlRed Pty LtdBlue Pty LtdMr BlueMrs Blue40%50%40%50%20%Mr & Mrs Blue have common control80%100%Images LEGOF orming a groupForming a groupRelated bodiescorporateUse of common employeesCommon controlTracing of interestTracing of InterestsTracing establishes control in a chain of businesses A relevant entity will control a corporation if it controls more

3 Than 50% of the voting shares held either directly, indirectly or through an aggregation of:Direct interestIndirectinterestTracing of InterestsMr Blue has an indirect interest in Orange Pty Ltd of 60% of 35% = 21% Mr Blue has an aggregate interest in Orange Pty Ltd of 40% + 21% = 61%Mr Blue60% direct interestGreen Pty Ltd40% directinterestOrange Pty Ltd35% direct interestGreen Pty Ltd and Orange Pty Ltd would be grouped asMr Blue has control of both indirect interestImage LEGOB usiness is part of two or more groupsIf a business is a member of two or more groups, the member of the groups together are considered as one large groupGroup OneOrange Pty LtdPurple Pty LtdBlue Pty LtdGreen Pty LtdOrange Pty LtdBlue Pty LtdGroup TwoGroup ThreeOrange Pty LtdPurple Pty LtdOrange Pty LtdGreen Pty Ltd+++Shared premises? Shared resources?Loans?ExclusionsGrouping Provisions are broad and may result in unintended groupingsNature of businesses?

4 Owners of businesses?Goods/services?Trade between businesses?Bulk buying?Financial dependence?Common management?To apply for an exclusion, businesses must be operating independently and not connectedPayroll Tax WebinarsWebinar OneUnderstanding the basics what it is, how it worksWebinar TwoAllowances, FBT, exemptionsand rebatesWebinarThreeContractorsWebinar FourGroupingsFurther 139 8204 21 305 6166 9262 6207 0079