Winday International Pty Ltd v Chief Commissioner of State Revenue

Jurisdiction of the Tribunal

1. A taxpayer may apply to the Tribunal for an administrative review of a decision that has been the subject of an objection under certain circumstances including if the taxpayer is dissatisfied with the Respondent's determination of the objection, s 96 of the Taxation Administration Act 1996 (TA Act). The Tribunal may confirm, vary or reverse a reviewable decision of an administrator and make orders as to costs or otherwise as it thinks fit, s 101(1) of the TA Act.
2. Although Winday applied for a review of the objection decision, the parties agree that the Tribunal's role in these proceedings is to review the Assessments.
3. The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice, s 38 (2) of the Civil and Administrative Tribunal Act 2013 (CAT Act). Further, at s 38 (4) and (5) the Tribunal is to act according to equity and good conscience and the substantial merits of the case without regard to technicalities and shall take such measures as are reasonably practicable to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered.
4. The Tribunal is to decide what the correct and preferable decision is, having regard to the material then before it, including any relevant factual material, and any applicable written or unwritten law, s 63 of the Administrative Decisions Review Act 1997 (ADR Act).
5. This matter was heard by Verick SM on 21 June 2016. After the hearing and before a decision was delivered, Verick SM became unavailable. Section 52 of the CAT Act provides that in such circumstances the President of the Tribunal may replace an unavailable member after affording the parties an opportunity to make submissions about the proposed replacement. The President afforded the parties such an opportunity and no submissions were received. Section 52 (3) provides: The Tribunal as so reconstituted is to have regard to the evidence, submissions and decisions in relation to the matter that were given or made before the Tribunal was reconstituted.

Material before the Tribunal

1. The Commissioner relied on documents filed under s 58 of the ADR Act, written submissions filed 21 January 2016 (RS), and oral submissions by Mr Rider, counsel for the Commissioner.
2. Winday relied on affidavits sworn on 15 October 2015 by Dr Karla Plehwe, radiologist and Mr Stephen Seeto, chief executive officer of Winday; written submissions filed 18 December 2015 (AS), written submissions in reply (ASR) filed 16 February 2016; and oral submissions by Mr Vale, solicitor appearing for Winday. Mr Seeto also gave oral evidence to the Tribunal.
3. I have considered the above material and a transcript of the hearing before Verick SM.
4. Unless stated to the contrary, references in these reasons to: 1. the Commissioner's submissions by paragraph number are to paragraphs in RS; 2. Winday's submissions by paragraph number are to paragraphs in AS; and. 3. legislative provisions are to provisions of the Act.

Legislative payroll tax scheme

1. In Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215, Sorensen SM succinctly described the general liability for payroll tax as follows: Liability for payroll tax 18 Under the terms of the Payroll Tax Act, payroll tax is imposed on all "taxable wages" (s 6). Liability for the tax falls upon the employer by whom taxable wages are paid or payable (s 7). "Taxable wages" are wages (excluding exempt wages) taxable in NSW (s 10). The term "wages" as defined in s 13(1) includes an amount that is "taken to be" wages by any other provision of the Act (s 13(1)(e)).
2. There is no dispute that both Contractor and Employment agency provisions were introduced to payroll tax legislation in New South Wales in 1985 to catch schemes designed to avoid liability for payroll tax. The structure of schemes varied although a common feature was to seek to sever the employer-employee relationship. As schemes changed over time the anti-avoidance legislation was updated.
3. The objection decision disallowed the objection on the basis that the Assessments included wages as determined under Division 7 "Contractor provisions", ss 31 to 36.
4. Subsequently, by letter dated 23 October 2015, the Commissioner informed Winday that in addition to the Division 7 liability, there was also a payroll tax liability under the employment agency provisions of Division 8, ss 37 to 42.

Winday's business and general submissions

1. Winday submitted at [11] and [14]: 11. The business of the Applicant is the provision of a fully operational and accredited radiology facility to radiologists … 14. The facility provides practising radiologists with a place of business, specialist radiological plant and equipment, medical supplies, semi-professional staff (including radiographers) and services and is operated by competent, non-professional, managerial and administrative staff.
2. Winday submitted that only a radiologist could render accounts for fees as required by the Health Insurance Act 1973 (Cth) and all fees received by Winday belonged to the radiologist. Mr Vale submitted that Winday merely accounted to the radiologist for the radiologist's own money after deducting Winday's service fee. The radiologists did not provide services to Winday and Winday did not make payments to the radiologists.
3. There is no dispute that Karval Imaging Pty Ltd (Karval) is a service entity nominee of Dr Valerie Ng, a radiologist. Nor is there any dispute that during the Tax Years both Dr Plehwe and Dr Ng used facilities provided by Winday in the course of their professional work as radiologists.
4. Unless the context otherwise requires, references in these reasons to "radiologists" are to Dr Plehwe and Karval.
5. The Commissioner stated at [5] Winday: … was an accredited medical imaging practice, which advertised and offered bulk-billing radiology services to patients … described the nature of its business as "Diagnostic Radiology" … [and] described (the radiologists) as "contractors" who provided "Radiology Services"
6. The Commissioner's position is that payments by Winday to the radiologists are taken to be wages paid or payable during the Tax Years under either the Contractor or Employment agency provisions. The Commissioner relies on what Mr Rider called the "extremely wide terms" used in the legislation.
7. Both Winday and the Commissioner provided further details of the operation of the business during the hearing.

Onus

1. Section 100 (3) of the TA Act provides that Winday bears the onus of proving its case to the ordinary civil standard, that is, on the balance of probabilities, by way of admissible and probative evidence. Winday did not dispute this obligation.

Issues

1. It is common ground that the issue before the Tribunal is whether Winday has incurred a payroll tax liability in respect of the Tax Years pursuant to either Division 7 or Division 8 in respect of amounts paid or payable by Winday to the radiologists.
2. Division 7 provides that amounts paid or payable by a person taken to be an employer for or in relation to the performance of work relating to a relevant contract (as defined) by a person taken to be an employee are taken to be wages paid or payable during the relevant financial year.
3. Division 8 provides that amounts paid or payable by a person taken to be an employer under an employment agency contract (as defined) to or in relation to a person taken to be an employee in respect of the provision of services in connection with that contract are taken to be wages for the purposes of the Act.
4. Mr Rider submitted that all the facts and circumstances satisfy the statutory provisions of both Division 7 and Division 8. However, the employment agent provisions and the relevant contractor provisions are mutually exclusive. Accordingly, if the Tribunal agrees with the Commissioner's submissions it may affirm the Assessments under either but not both of those provisions.
5. Mr Vale submitted that Winday did not pay wages nor was any amount paid by Winday taken to be wages under either Division 7 or Division 8.
6. I will firstly consider the application of Division 8 to the facts in evidence. Relevantly Division 8 states: Division 8 Employment agents 37 Definitions (1) For the purposes of this Act, an employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent. (2) However, a contract is not an employment agency contract for the purposes of this Act if it is, or results in the creation of, a contract of employment between the service provider and the client. (3) In this section: contract includes agreement, arrangement and undertaking. 38 Persons taken to be employers For the purposes of this Act, the employment agent under an employment agency contract is taken to be an employer. 39 Persons taken to be employees For the purposes of this Act, the person who performs work for or in relation to which services are supplied to the client under an employment agency contract is taken to be an employee of the employment agent. 40 Amounts taken to be wages (1) For the purposes of this Act, the following are taken to be wages paid or payable by the employment agent under an employment agency contract: (a) any amount paid or payable to or in relation to the service provider in respect of the provision of services in connection with the employment agency contract, … 41 Liability provisions Subject to section 42, if an employment agent under an employment agency contract: (a) by arrangement procures the services of a service provider for a client of the employment agent, and (b) pays payroll tax in respect of an amount, benefit or payment that is, under section 40, taken to be wages paid or payable by the employment agent in respect of the provision of those services in connection with that contract, no other person (including any other person engaged to procure the services of the service provider for the employment agent's client as part of the arrangement) is liable to pay payroll tax in respect of wages paid or payable for the procurement or performance of those services by the service provider for the client. 42 Agreement to reduce or avoid liability to payroll tax (1) If the effect of an employment agency contract is to reduce or avoid the liability of any party to the contract to the assessment, imposition or payment of payroll tax, the Chief Commissioner may: (a) disregard the contract, and (b) determine that any party to the contract is taken to be an employer for the purposes of this Act, and (c) determine that any payment made in respect of the contract is taken to be wages for the purposes of this Act. (2) If the Chief Commissioner makes a determination under subsection (1), the Chief Commissioner must serve a notice of the determination on the person taken to be an employer for the purposes of this Act. (3) The notice must set out the facts on which the Chief Commissioner relies and the reasons for the determination. (4) This section has effect in relation to agreements, transactions and arrangements made before, on or after the commencement of this section.
7. Having regard to s 40 it is necessary, that for amounts paid or payable to be taken to be wages those amounts must be paid or payable by an employment agent under an employment agency contract.
8. Both "contract" and "employment agency contract" are defined in s 37. For there to be an employment agency contract there must be a contract under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent.
9. Mr Vale initially argued that the members of the public who attended the premises for radiology services were clients of the relevant radiologist who was the "service provider", not clients of Winday.
10. After some discussion Mr Vale obtained instructions and conceded that Winday marketed to doctors (GPs) and, albeit to a lesser extent, to individual patients, (members of the public) so they could both potentially be clients.
11. Mr Vale submitted that whether the client is the GP or the patient, the employment agency provisions cannot apply.
12. He submitted that it was clear that the provision was introduced as an anti-avoidance rule so as to tax the client, who was otherwise avoiding payroll tax. Mr Vale said that this was very clear from the explanatory statements both in respect of the predecessor to the current legislation and other state legislation. It was aimed at stopping a client from avoiding payroll tax. He submitted that this cannot practically work in circumstances where the patient is the client. Mr Vale submitted: … I don't believe the tribunal should extend the range of situations where the employment agency provisions would apply in circumstances where it is totally outside of what the provision was introduced to deal with and that is disguise employment employee relationships, which certainly is not the case in either where the client is the patient or the GP. It would lead to some very absurd results going forward. It would lead to a huge increase in the reach of the tax which clearly is not the way that the OSR tax the employment agency provisions at this point in time and if it was intended that that be the reach, then there should be something very specific to say that that was intended. … I'm saying you need to interpret the legislation and apply the legislation to the facts. …
13. In AS Winday submitted at [110]: The employment agency provisions are found in the context of an Act taxing businesses for employing staff. As the explanatory material explains the effective business being taxed is that of the "client". For certainty as a consequence of the decision in Drake Personnel the liability for that tax was moved to the "employment agent".
14. At [111] Winday referred to the decision of White J in Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127 and extracted from [148] in that decision excerpts of a history of amendments to the predecessor to the Act and an explanatory speech by the Minister introducing an amendment. Winday then continued at [112]: That is, the Act sought to levy payroll tax on the wages of the client's business. The levy of the tax on the employment agent was done for the purposes solely of collecting the tax. In these circumstances the client has no business and there are no appropriate wages. The client is rather attending the radiologist to undertake tests so that the radiologist may report to the general practitioner taking care of the client.
15. In partial response to AS at [109] - [115] the Commissioner at [44] referred to Freelance at [149] - [152]. In those paragraphs of his decision, White J acknowledged that the plaintiff had submitted that the legislative history demonstrated that it was Parliament's intention that the employment agents provision should apply only to employment agents or labour hire firms, that is persons who source, vet and supply persons, whether employees or independent contractors, to clients of the employment agent or labour hire entity. His Honour said "Undoubtedly it was Parliament's intention that the amendments should apply to such persons." However, His Honour went on to say at [149] "It does not follow that that was the only intended application of the provision". His Honour expanded on his reasoning at [150] and following.
16. The Commissioner submitted at [44] that the employment agency provisions were to be construed according to their terms and, relying on the reasoning in Freelance, said the construction was not to be by reference to notions said to arise from the legislative history.
17. In making a submission on statutory interpretation Winday said at [77]: The interpretation of statutes, including taxing statutes, was considered by the High Court in Cooper Brookes (Wollongong) Pty Limited v Commissioner of Taxation (1980) 147 CLR 297. The late Justice Hill in a paper in 2001 "How is tax to be understood by the Courts?" for the Taxation Institute of Australia 2001 South Australia State Convention stated that the following principles could be extracted: (a) The fundamental rule of interpretation is to ascertain what Parliament intended as expressed in the words it has used (1980) 147 CLR 297, 304 (Gibbs CJ), 319 (Mason and Wilson JJ) (b) Context is vital. Sections are not to be construed in isolation (1980) 147 CLR 297, 304 (Gibbs CJ) (c) Where the language if a statute is clear and unambiguous and consistent with context it must be given its ordinary and grammatical meaning, even if the result is inconvenient (1980) 147 CLR 297, 305 (Gibbs CJ) (d) Where two constructions are open the court will prefer the construction that avoids inconvenience or injustice (1980) 147 CLR 297, 305 (Gibbs CJ) (e) Where the literal meaning of words is to be departed from it must be clear that the literal meaning does not give effect to the intention of the legislature and that a departure from the literal meaning will achieve that intention (1980) 147 CLR 297, 310 (Stephen J) (f) The literal meaning will be departed from where it gives rise to an operation that is capricious or irrational (1980) 147 CLR 297, 320-1 (Mason and Wilson JJ).
18. Having regard to my findings below as to relevant facts and to White J's reasoning in Freelance at [149] I have interpreted relevant parts of the Act in accordance with Winday's above submission.
19. There is no dispute that for the purposes of the Act s 37 (1) defines an employment agency contract as a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent.
20. The Respondent submitted at [46] that having regard to the s 37 definition it is necessary that there be a contract under which the employment agent procures the services of another person (service provider) for a client of the employment agent. The Commissioner submits "it is apposite to consider the existence of a "contract" between Winday (as an employment agent) and a "service provider" and another contract between Winday and a "client".

The operation of Winday's business

1. It is appropriate to consider in some detail the manner in which the business operated during the Tax Years.
2. In his affidavit Mr Seeto said: 2 The business of the Applicant is the provision of a fully operational and accredited radiology facility to radiologists trading as Essential Medical Imaging from premises at ... George Street, Sydney" [the premises] … 5 The facility provides practising radiologists with a place of business, specialist radiological plant and equipment, medical supplies, semi-professional staff (including radiographers) and services and is operated by competent, non-professional, managerial and administrative staff. … 7 The Applicant, on behalf of radiologists, advertises the facility as a bulk billing facility allowing the medical services provided by the radiologists to be provided to patients through the Medicare system without the need for the patient to pay any amount out of their own pocket. 8 The Applicant is unable to perform any scans unless the patient has a referral from a GP setting out the need for the scan and the provider number of the GP. 9 The Applicant has protocols and procedures in place … a radiologist will not prepare a report without reviewing the referral to understand the need and issues sought by the GP. 10 The GP is the party that refers the patient to the radiologist and the facility. … The way the radiologist's report is provided is wholly dependent on the radiologist and not the Applicant. 11 The Applicant has to operate the facility or parts of the facility depending on the particular requirements of the radiologist using the facility at a particular time. The radiologist will establish how the semi-professional and other staff at the facility are to work in order to allow the radiologist to prepare his or her radiologist reports. This includes determining how films are to be prepared and presented, the workflow of the facility and the presentation of the work stations used by the radiologists. … 13 When a patient enters the facility with a referral, the patient is not provided with an invoice. Rather, the Applicant on behalf of the radiologist swipes the Medicare card of the patient. … 14 The scan can only be performed at the Applicant's facility whilst a radiologist is at the Applicant's facility. 15 The Medicare system pays the radiologist a prescribed fee. The radiologists has directed that the fee they are entitled under Medicare for the medical services provided be paid to the Applicant so the Applicant can undertake the administrative task of collecting, accounting and remitting radiologists fees to the radiologist. … 18 The Applicant does not employ radiologists. Rather, radiologists are aware that the facility is available and the Applicant agrees to make the facility available to radiologists on a mutually agreeable schedule. 19 All radiologists who use the facility have their own ABN and own insurance. … … 21 … the Applicant enters into a service agreement with radiologists (Agreement) regarding the provision of services and the facility by the Applicant to radiologists. Annexed and marked 'A' is a copy of the Agreement 22 Radiologists are free to decide whether to use the Applicant's facility or not … 23 The Applicant has no contracts with radiologists requiring then to work at the Applicant's facility at particular times. The Applicant cannot compel any radiologist to attend the Applicant's facility and prepare radiology reports. The Applicant has no control over how often radiologists choose to work. The radiologists determine their own working hours, regulate their own work and perform their work without any instruction or direction from the Applicant … 26 … Generally, the facility is not large enough to allow multiple radiologists to book the use of the facility at the one time. Usually, radiologists book the facility for dedicated periods of time. … 28 The arrangements between the Applicant and all radiologists were on the same basis using the Agreement as the basis for the relationship between the Applicant and the radiologists.
3. At [96] and [97] Winday submitted: 96 The Applicant has no contracts with radiologists requiring then to work at the Applicant's facility at particular times. The Applicant cannot compel any radiologist to attend the Applicant's facility and prepare radiology reports. The Applicant has no control over how often radiologists choose to work. … 97 The Agreement does not place any obligation on a radiologist to provide services for or in relation to work. The Agreement only places obligations on radiologists to pay for services provided by the Applicant to radiologists if the radiologists use the Applicant's facility.
4. There is no dispute that there is a relatively standard form agreement which is either entered into by Winday and each radiologist, or its nominated service entity (such as Karval), (Mr Seeto's affidavit at [21] and annexure 'A') or which forms the basis of an arrangement or understanding between Winday and certain radiologists (Dr Plehwe's affidavit at [19] and Mr Seeto's oral evidence).
5. However, I find that the terms of the agreement at annexure 'A' of Mr Seeto's affidavit (Service Agreement) provide that the obligations of radiologists who are parties goes beyond Winday's statements in [96] and [97]. Express obligations of the radiologists include: 1. immediately delivering, without deduction, to Winday all "monies received by him or her (whether from a patient, Medicare, a Medical Benefit Fund or otherwise) which appears to be in payment (in whole or in part) for Radiological services rendered by him/her or any other person on their behalf from the Premises, clause 4B. The Premises are premises from which Winday operates its radiological facility and at which Winday provides equipment, premises, staff, consulting rooms, all necessary utilities, and other services and facilities reasonably requested in writing by the radiologist to enable the radiologist to fulfil his obligations to the patients attending the Premises", clause 3B. 1. Completing signing and delivering to Winday all forms necessary to enable Winday to seek payment from Medicare (or other institutions) in respect of the entire services provided by the Radiologist or to assist Winday to seek payment of (certain) grants and subsidies, clause 4C. 2. from clause 6A: The Radiologist will arrange to provide locum cover if he is unable to provide the Radiology services on any given day. The [Applicant] may assist the Radiologist to arrange such locum cover. The locum Radiologist will assume the place of the Radiologist under this agreement as if he were the Radiologist himself.
6. Clause 7A states the radiologist "by this agreement indemnifies the [Applicant] against "any liability whatsoever arising from the Radiologist rendering diagnostic Radiology services pursuant to or in connection with or during the term of this agreement or arising from any other acts or failure to act on the part of the Radiologist, whether of a Radiology service nature or otherwise."
7. Clause 8 provides that either party may terminate the Agreement on the happening of certain events. In particular, Winday may terminate the Agreement if the radiologist "has been accused of committing an act which in the reasonable opinion of the [Applicant] adversely affects the reputational business of the practice conducted from the premises" or "the Radiologist is guilty of a wilful neglect or misconduct".
8. The Service Agreement provides other express obligations on the part of each radiologist who is a party to the Agreement.
9. Mr Seeto deposed at [18] "the Applicant agrees to make the facility available to radiologists on a mutually agreeable schedule". However, there is no express stipulation as to the dates on which a radiologist is required or entitled to attend and provide radiology services at the premises. Nor is there any provision as to the procedure by which agreement will be reached between the radiologist and Winday as to those dates.
10. The Agreement provides at clause 5 that Winday will charge and the radiologist will pay, by way of remuneration for the use of the premises and the services provided by [Winday], a specific percentage of all billings issued by the [Applicant] "as are directly referable to diagnostic Radiology services rendered by the Radiologist". That clause also provides at 5A and 5B: [Winday] agrees and the Radiologist accepts that the net amount payable to the Radiologist shall not be less than AUD$2,000 exclusive of any uppercase GST for any given day that the services are provided. [Winday] may at its discretion, vary the percentage charged to the Radiologist based on its assessment of the performance of the Radiologist or increases in costs in the provision of the Premises for use by the Radiologist subject to the provisions of clause 5B.
11. Mr Vale referred Mr Seeto to his affidavit and said "and the annexure, is that a copy of the services agreement that is used by Winday International with its radiologists? Mr Seeto replied "Yes"
12. In cross-examination when asked whether that agreement "was the standard services agreement between Winday and radiologists Mr Seeto said "Yes, that - it's not signed, but it is basically effectively what we start with." Subsequently he said that some radiologists wanted changes made and there were "potentially a number of variations based on what they feel they want".
13. Mr Seeto confirmed that the Medicare payments referred to in clause 15 of the Service Agreement (which states "The Medicare system pays the radiologist a prescribed fee") were for services rendered by the radiologists.
14. In response to questions from Verick SM, Mr Seeto acknowledged that all money received from Medicare (for the radiologists services at the Premises) was paid into Winday's bank account, that there were no separate accounts of the doctors in any bank, and that Winday did not have sub-accounts.
15. Notwithstanding Winday's submissions that no services were provided by the radiologists I find on the evidence before me that professional radiology services were provided by the radiologists and that those services were provided in the course of a business carried on by Winday.
16. Contract is defined in s 37(3) to include "agreement, arrangement or undertaking" and in s 37 (1) an employment agency contract is described as "a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent."
17. Having regard to the facts outlined above I find that there existed a contract, as defined, between Winday and each of the radiologists. I also find that, amongst other provisions, each contract required the relevant radiologist to perform radiology services for patients at the Premises.

Did Winday as employment agent procure the services of the radiologists (the service providers) for clients of the employment agent?

1. The Commissioner submitted at [47]: As to the meaning of "procures", the Court in Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127 held at [115]: I think the better view is that "procure" when used in ... s 37 means more than facilitate or enable and requires that the employment agent cause the services of a contract worker (or service provider) to be provided to the employment agent's client, with the expenditure of care or effort by the employment agent. I do not accept that this can only be done if the employment agent recruits the contract worker or service provider for the client.
2. In Freelance White J was dealing with a situation in which relevant services were provided by Freelance to its clients pursuant to an agreement or understanding between the service providers and Freelance that the service providers would perform Freelance's obligation to its clients.
3. After a lengthy consideration of the use of the word "procure" in s 37, His Honour said at [119] to [121]: 119 In my view, Freelance procured the services of its contractors to its clients by producing them by endeavour. It set out to see that the services were provided and took the appropriate steps to produce that happening by means of: … (c) in many cases, by making fixed distributions of income that were paid on terms that the contractors would provide services as reasonably requested by Freelance; (d) by having an understanding and arrangement with its contractors for them to supply the services Freelance agreed to supply to its clients; and (e) by entering into its contracts with its clients for the provision of services by its contractors. 120 It is not essential that Freelance's efforts be the sole cause of the provision of services by the beneficiary contractors to its clients. 121 This conclusion is consistent with such authority as there is on similar provisions in payroll tax legislation. …
4. I observe that the Service Agreement included at clause 5 an obligation that Winday would ensure that the net amount payable to the radiologist "shall not be less than AUD$2,000 exclusive of any GST for any given day that the services are provided."
5. I am satisfied that for the purposes of the Act Winday procured the professional services of the radiologists to be supplied to patients at the Premises.
6. At [26] Mr Seeto said Winday's facility was not large enough to allow multiple radiologists to book the use of the facility at the one time and usually radiologists booked the facility for dedicated periods. Dr Plehwe's evidence at [17] affidavit was that she had no contractual obligation to use the facility. However "the days that I attend are by mutual agreement …"
7. At [23] Mr Seeto said Winday has no contracts with radiologists requiring them to work at Winday's facility at particular times. Winday cannot compel any radiologist to attend Winday's facility and prepare radiology reports. Mr Seeto's evidence contradicts clause 6 of the Service Agreement which requires a radiologist party to either use the facility on the agreed dates or ensure that a locum radiologist provides relevant services as if the locum was "the radiologist himself".
8. I prefer the written terms of the Service Agreement to Mr Seeto's contrary evidence that Winday has no contracts with radiologists requiring them to work at the facility. I find that the Service Agreement, once entered into by Winday and a radiologist, forms part of the agreement arrangement or undertaking which comprises an employment agency contract pursuant to Division 8.
9. Put another way, having regard to the above evidence and my findings I am satisfied that once an agreement has been made between a radiologist and Winday for the radiologist to attend at and use the resources of the facility there is a contractual obligation for that radiologist to either use the resources to provide radiology services or to provide a locum to provide those services as if the locum was "the radiologist himself".
10. Mr Vale conceded that it was at least arguable that radiology services are provided to either or both the patients presenting at the premises or the GPs who referred the patients.
11. During the hearing Mr Vale said: Well, the applicant markets to doctors and the applicant also, to a lesser extent, markets to individual patients so they could both potentially be the clients.
12. The Commissioner submitted: 48 … The Act does [not] define the word "client" and it does not appear to have been considered in any meaningful way in any of the decisions concerning the employment agent provisions. The ordinary meaning of "client" (in context) is "a customer". Here, a "client" of the Applicant were patients attending the Applicant's facility and/or referring doctors (see further below). 49 On the evidence, there was clearly a "contract" (within the wide meaning of that term) between the Applicant and a "client" (i.e. patients and/or referring doctors). In this regard, the Applicant advertised itself as offering bulk-billed radiology services to the public, with the implied undertaking that it would procure the services of qualified radiologists to provide the required medical services The Applicant's offer was then accepted by patients attending its premises and being provided with medical services by the radiologists in return for the Applicant receiving payments from Medicare.
13. Winday's a written response in ASR was: 20. Contrary to what is said in paragraph 49 of the Respondent's Written Submissions it is not accepted by the Applicant that there is a "contract" between the Applicant and a client (patients or referring doctors). The statutory framework of Medicare and the prohibition on anybody other than medical practitioners providing radiologist services makes does not support the contention of the Respondent.
14. No evidence was brought to the attention of the Tribunal in respect of the statutory framework of Medicare or the prohibition referred to at [20] in ASR.
15. The s 58 documents included downloads from Winday's website referred to bulk billing. The website also provided, under the heading "our staff", the names of several radiologists including Dr Plehwe and Dr Ng; Winday agreed to accept all referrals and listed the services provided including CT scans, ultrasounds, X-Rays, and dental imaging; it was stated that Essential Medical Imaging "has been established to provide patients and medical practitioners with access to bulk billing medical imaging …" Our mission is to provide the best possible professional care in medical imaging; to help our referring doctors and all the patients who choose our service".
16. Dr Plehwe's affidavit at [12] and [16] includes: 12 When I am at the facility, I control how the semi-professional and other staff work in order to allow me to prepare my radiologist reports. This includes determining how films are to be prepared and presented, and the presentation of the work stations used by me. 16 … I am a medical specialist. I provide my services to GPs and their patients. I use the facilities and services of the Applicant to allow me to conduct my practice.
17. Mr Vale submitted that the Tribunal should not rely on various documents in evidence including downloads from the web-site which mis-described the true legal relationship between the parties. I do not regard the web-site as determining the relevant legal relationship. However, I do find that it corroborates aspects of Dr Plehwe's and Mr Seeto's evidence as to the factual basis in respect of which Winday's business operated during the Tax Years.
18. Having regard to the above evidence I find that Winday made an offer pursuant to its advertising to provide services to the public with the implied undertaking that it would procure the services of qualified radiologists to provide the required medical services. I am satisfied that Winday's offer was accepted by patients attending its premises and being provided with medical services by the radiologists utilising Winday's facilities, including both equipment and staff. To this extent I am satisfied that the patients receiving those services were clients of Winday for the purposes of Division 8.
19. I observe that no GP referrals were produced in evidence. It may be that GPs who prepared written referrals for their patients and who received relevant radiology reports from the radiologists were clients of Winday for the purposes of the Division. In any event, and having regard to the onus which lies on Winday to prove its case on the balance of probability, I am not satisfied that such GPs were not clients of Winday.
20. Having regard to my above findings I am satisfied that the contracts under which Winday procured the services of the radiologists were for clients of Winday and as such they are employment agency contracts. Section 32 provides that employment agency contracts are not relevant contracts for the purposes of that section. Accordingly, I find that there is no relevant contract to attract the operation of Division 7.
21. The Assessments included amounts payable in respect of interest and penalty tax. The objection in respect of the Assessments did not refer to those amounts nor did Winday's submissions refer to interest or penalty tax included in the Assessments. As there is no evidence of an objection to these matters, s 96 of the TA Act does not apply and I make no decision in relation thereto.
22. The objection stated: The taxpayer reserves its right to seek the Commissioner to exercise his discretion to degroup the businesses of the taxpayer and Mediforce International Holdings Pty Ltd on the basis that the businesses are substantially independent for the period of.
23. The objection decision stated: As you noted in your objection the client may seek an exclusion determination. There is an online application form and questionnaire to assist clients in lodging a complete application.
24. The degrouping issue was not raised by Winday in these proceedings and I make no decision in relation thereto.

Decision

1. Having regard to my above findings on the material before me, I am not satisfied that Winday has satisfied its onus of proving on the balance of probabilities by way of admissible and probative evidence that the Assessments in respect of the Tax Years are incorrect.
2. Accordingly, the correct and preferable decision of the Tribunal is that the decision of the Chief Commissioner under review is affirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 November 2016