Part 5Grouping of employers

Part 5—Grouping of employers Division 1—Interpretation 67—Definitions business includes— (a) a profession or trade; and (b) any other activity carried on for fee, gain or reward; and (c) the activity of employing 1 or more persons who perform duties for or in connection with another business; and (d) the carrying on of a trust (including a dormant trust); and (e) the activity of holding any money or property used for or in connection with another business, whether carried on by 1 person or 2 or more persons together; group means a group constituted under this Part, but does not include any member of the group in respect of whom a determination under Division 4 is in force. 68—Grouping provisions to operate independently The fact that a person is not a member of a group constituted under a provision of this Part does not prevent that person from being a member of a group constituted under another provision of this Part. Division 2—Business groups 69—Constitution of groups A group is constituted by all the persons or bodies forming a group that is not a part of any larger group. 70—Groups of corporations Corporations constitute a group if they are related bodies corporate within the meaning of the Corporations Act 2001 of the Commonwealth. 71—Groups arising from the use of common employees (1) If 1 or more employees of an employer perform duties for or in connection with 1 or more businesses carried on by the employer and 1 or more other persons, the employer and each of those other persons constitute a group. (2) If 1 or more employees of an employer are employed solely or mainly to perform duties for or in connection with 1 or more businesses carried on by 1 or more other persons, the employer and each of those other persons constitute a group. (3) If 1 or more employees of an employer perform duties for or in connection with 1 or more businesses carried on by 1 or more other persons, being duties performed in connection with, or in fulfilment of the employer's obligation under, an agreement, arrangement or undertaking for the provision of services to any 1 or more of those other persons in connection with that business or those businesses, the employer and each of those other persons constitute a group. (4) Subsection (3) applies to an agreement, arrangement or undertaking— (a) whether the agreement, arrangement or undertaking is formal or informal, express or implied; and (b) whether or not the agreement, arrangement or undertaking provides for duties to be performed by the employees or specifies the duties to be performed by them. Section 79 (Exclusion of persons from groups) allows the Commissioner, for payroll tax purposes, to exclude persons from a group constituted under this section in certain circumstances. 72—Groups of commonly controlled businesses (1) If a person or set of persons has a controlling interest in each of 2 businesses, the persons who carry on those businesses constitute a group. Section 79 (Exclusion of persons from groups) allows the Commissioner, for payroll tax purposes, to exclude persons from a group constituted under this section in certain circumstances. (2) For the purposes of this section, a person or set of persons has a controlling interest in a business if— (a) in the case of 1 person—the person is the sole owner (whether or not as trustee) of the business; or (b) in the case of a set of persons—the persons are together the owners (whether or not as trustees) of the business; or (c) in the case of a business carried on by a corporation— (i) the person or each of the set of persons is a director of the corporation and the person or set of persons is entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation; or (ii) a director or set of directors of the corporation that is entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation is under an obligation, whether formal or informal, to act in accordance with the direction, instructions or wishes of that person or set of persons; or (d) in the case of a business carried on by a body corporate or unincorporate—that person or set of persons constitute more than 50% of the board of management (by whatever name called) of the body or control the composition of that board; or (e) in the case of a business carried on by a corporation that has a share capital—that person or set of persons can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, more than 50% of the voting power attached to the voting shares, or any class of voting shares, issued by the corporation; or (f) in the case of a business carried on by a partnership—that person or set of persons— (i) own (whether beneficially or not) more than 50% of the capital of the partnership; or (ii) is entitled (whether beneficially or not) to more than 50% of the profits of the partnership; or (g) in the case of a business carried on under a trust—the person or set of persons (whether or not as a trustee of, or beneficiary under, another trust) is the beneficiary in respect of more than 50% of the value of the interests in the first‑mentioned trust. (3) If— (a) 2 corporations are related bodies corporate within the meaning of the Corporations Act 2001 of the Commonwealth; and (b) 1 of the corporations has a controlling interest in a business, the other corporation has a controlling interest in the business. (4) If— (a) a person or set of persons has a controlling interest in a business; and (b) a person or set of persons who carry on the business has a controlling interest in another business, the person or set of persons referred to in paragraph (a) has a controlling interest in that other business. (5) If— (a) a person or set of persons is the beneficiary of a trust in respect of more than 50% of the value of the interests in the trust; and (b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of another trust, the person or set of persons has a controlling interest in the business. (6) A person who may benefit from a discretionary trust as a result of the trustee or another person, or the trustee and another person, exercising or failing to exercise a power or discretion, is taken, for the purposes of this Part, to be a beneficiary in respect of more than 50% of the value of the interests in the trust. (7) If— (a) a person or set of persons has a controlling interest in the business of a trust; and (b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of a corporation, the person or set of persons is taken to have a controlling interest in the business of the corporation. (8) If— (a) a person or set of persons has a controlling interest in the business of a trust; and (b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of a partnership, the person or set of persons is taken to have a controlling interest in the business of the partnership. 73—Groups arising from tracing of interests in corporations (1) An entity and a corporation form part of a group if the entity has a controlling interest in the corporation. Section 79 (Exclusion of persons from groups) allows the Commissioner, for payroll tax purposes, to exclude persons from a group constituted under this section in certain circumstances. (2) For the purposes of this section, an entity has a controlling interest in a corporation if the corporation has share capital and— (a) the entity has a direct interest in the corporation and the value of that direct interest exceeds 50%; or (b) the entity has an indirect interest in the corporation and the value of that indirect interest exceeds 50%; or (c) the entity has an aggregate interest in the corporation and the value of the aggregate interest exceeds 50%. (3) Division 3 applies for the purposes of the interpretation of this section. Division 3 sets out the manner for determining whether an entity has a direct interest, indirect interest or aggregate interest in a corporation, and the value of such an interest. (4) In this section— associated person means a person who is associated with another person in accordance with any of the following provisions: (a) persons are associated persons if they are related persons; (b) natural persons are associated persons if they are partners in a partnership; (c) private companies are associated persons if common shareholders have a majority interest in each private company; (d) trustees are associated persons if any person is a beneficiary common to the trusts (not including a public unit trust scheme) of which they are trustees; (e) a private company and a trustee are associated persons if a related body corporate of the company (within the meaning of the Corporations Act 2001 of the Commonwealth) is a beneficiary of the trust (not including a public unit trust scheme) of which the trustee is a trustee; domestic partner means a person who is a domestic partner within the meaning of the Family Relationships Act 1975, whether declared as such under that Act or not; entity means— (a) a person; or (b) 2 or more persons who are associated persons (as defined in this section); private company means a company that is not limited by shares, or whose shares are not quoted on the Australian Stock Exchange or any exchange of the World Federation of Exchanges; related person means a person who is related to another person in accordance with any of the following provisions: (a) natural persons are related persons if— (i) 1 is the spouse or domestic partner of the other; or (ii) the relationship between them is that of parent and child, brothers, sisters, or brother and sister; (b) private companies are related persons if they are related bodies corporate within the meaning of the Corporations Act; (c) a natural person and a private company are related persons if the natural person is a majority shareholder or director of the company or of another private company that is a related body corporate of the company within the meaning of the Corporations Act; (d) a natural person and a trustee are related persons if the natural person is a beneficiary of the trust (not being a public unit trust scheme) of which the trustee is a trustee; (e) a private company and a trustee are related persons if the company, or a majority shareholder or director of the company, is a beneficiary of the trust (not being a public unit trust scheme) of which the trustee is a trustee. 74—Smaller groups subsumed by larger groups (1) If a person is a member of 2 or more groups, the members of all the groups together constitute a group. (2) If 2 or more members of a group have together a controlling interest in a business (within the meaning of section 72), all the members of the group and the person or persons who carry on the business together constitute a group. Section 79 (Exclusion of persons from groups) allows the Commissioner, for payroll tax purposes, to exclude persons from a group constituted under this section in certain circumstances. Division 3—Business groups—tracing of interests in corporations 75—Application This Division applies for the purposes of section 73 (Groups arising from tracing of interests in corporations). 76—Direct interest (1) An entity has a direct interest in a corporation if— (a) in the case of an entity that is a person—the person can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, the voting power attached to any voting shares issued by the corporation; or (b) in the case of an entity that is 2 or more persons who are associated persons—each of the associated persons can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, the voting power attached to any voting shares issued by the corporation. (2) The value of the direct interest of the entity in the corporation is the proportion (expressed as a percentage) of the voting power of all voting shares issued by the corporation that— (a) in the case of an entity that is a person—the person can directly or indirectly exercise, control the exercise of, or substantially influence the exercise of, as referred to in subsection (1); or (b) in the case of an entity that is 2 or more persons who are associated persons—the associated persons can, if acting together, directly or indirectly exercise, control the exercise of, or substantially influence the exercise of, as referred to in subsection (1). 77—Indirect interest (1) An entity has an indirect interest in a corporation if the corporation is linked to another corporation (the directly controlled corporation) in which the entity has a direct interest. (2) A corporation is linked to a directly controlled corporation if the corporation is part of a chain of corporations— (a) that starts with the directly controlled corporation; and (b) in which a link in the chain is formed if a corporation has a direct interest in the next corporation in the chain. (3) The following are examples of how subsections (1) and (2) work (the examples are cumulative): (a) corporation A (a directly controlled corporation) has a direct interest in corporation B. Corporations A and B form part of a chain of corporations, and corporation B is linked to corporation A. Accordingly, an entity that has a direct interest in corporation A also has an indirect interest in corporation B; (b) corporation B also has a direct interest in corporation C. In this case, corporations A, B and C form part of a chain of corporations. Both corporations B and C are linked to corporation A. The entity that has a direct interest in corporation A has an indirect interest in both corporations B and C; (c) corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, 1 consisting of A, B and C, and 1 consisting of A, B and D. Corporations B, C and D are all linked to corporation A and an entity that has a direct interest in corporation A would have an indirect interest in corporations B, C and D. An entity that has a direct interest in corporation B would have an indirect interest in corporations C and D. However, an entity that has a direct interest in corporation C only would not have an indirect interest in corporation D, as corporation D is not linked to corporation C. (4) The value of the indirect interest of an entity in a corporation (an indirectly controlled corporation) that is linked to a directly controlled corporation is calculated by multiplying together the following: (a) the value of the direct interest of the entity in the directly controlled corporation; (b) the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation. (5) The following are examples of how subsection (4) works (the examples are cumulative): (a) an entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the indirect interest of the entity in corporation B is 80% × 70% (that is, 56%). Accordingly, in this example the entity has a controlling interest (within the meaning of section 73 (Groups arising from tracing of interests in corporations)) in corporation B; (b) corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the indirect interest of the entity in corporation C is 80% × 70% × 40% (that is, 22.4%). Accordingly, in this example the entity does not have a controlling interest in corporation C. (6) It is possible for an entity to have more than 1 indirect interest in a corporation. This may occur if the corporation is linked to more than 1 corporation in which the entity has a direct interest, or if the corporation is linked to only 1 corporation in which the entity has a direct interest but is linked through more than 1 chain of corporations. In that case, the entity has an aggregate interest in the corporation (see section 78 (Aggregation of interests)). 78—Aggregation of interests (1) An entity has an aggregate interest in a corporation if— (a) the entity has a direct interest and 1 or more indirect interests in the corporation; or (b) the entity has more than 1 indirect interest in the corporation. (2) The value of the aggregate interest of an entity in a corporation is the sum of the following: (a) the value of the direct interest (if any) of the entity in the corporation; (b) the value of each indirect interest of the entity in the corporation. (3) For example— (a) an entity has a direct interest (with a value of 40%) in corporation B; (b) the entity also has a direct interest (with a value of 25%) in corporation A, which in turn has a direct interest (with a value of 60%) in corporation B. Accordingly, the entity also has an indirect interest in corporation B with a value of 15% (that is, 25% × 60%); (c) the value of the entity's aggregate interest in corporation B is the sum of the direct interest (40%) and the indirect interest (15%), which is 55%; (d) accordingly, in this example, the entity has a controlling interest in corporation B (within the meaning of section 73 (Groups arising from tracing of interests in corporations)). Division 4—Miscellaneous 79—Exclusion of persons from groups (1) The Commissioner may, by order in writing, determine that a person who would, but for the determination, be a member of a group is not a member of the group. (2) The Commissioner may only make such a determination if satisfied, having regard to the nature and degree of ownership and control of the businesses, the nature of the businesses and any other matters the Commissioner considers relevant, that a business carried on by the person, is carried on independently of, and is not connected with the carrying on of, a business carried on by any other member of that group. (3) The Commissioner cannot exclude a person from a group if the person is a body corporate that, by reason of section 50 of the Corporations Act 2001 of the Commonwealth, is related to another body corporate that is a member of that group. (4) This section extends to a group constituted by reason of section 74 (Smaller groups subsumed by larger groups). (5) A determination can be expressed to take effect on a date that is earlier than the date of the determination. (6) The Commissioner may by order in writing revoke a determination that applies in respect of a person if satisfied that the circumstances in which a determination may be made do not apply to the person. (7) The revocation of a determination can be expressed to take effect on a date that is earlier than the date of the determination. 80—Designated group employers (1) The members of a group may, with the approval of the Commissioner, designate a qualified member of the group to be the designated group employer for the group for the purposes of this Act. (2) A member of a group is a qualified member if the member— (a) has paid during the preceding financial year wages that exceeded $600 000; or (b) is likely to pay during the current financial year wages that are likely to exceed that amount. (3) If none of the members of a group is a qualified member the members may, with the approval of the Commissioner, designate any member of the group to be the designated group employer for the group for the purposes of this Act. (4) If the members of a group do not designate a member as the designated group employer within 7 days after the end of the month in which the group is established, the Commissioner may (but is not obliged to) designate any member of the group as the designated group employer. (5) The designated group employer of a group stops being the designated group employer from and including the earlier of the following days: (a) the first day of a return period during which there is a change in the membership of the group; (b) the first day of a return period during which the members of the group revoke the designation. (6) The designation of a designated group employer under subsection (1) or (3) must be by notice in writing. (7) Such a notice must— (a) be executed by or on behalf of each member of the group; and (b) be served on the Commissioner. 81—Joint and several liability (1) If a member of a group fails to pay an amount that the member is required to pay under this Act in respect of any period, every member of the group is liable jointly and severally to pay that amount to the Commissioner. (2) If 2 or more persons are jointly or severally liable to pay an amount under this section, the Commissioner may recover the whole of the amount from them, or any of them, or any 1 of them. (3) If, under this section, 2 or more persons are jointly and severally liable to pay an amount that is payable by any 1 of them, each person is also jointly and severally liable to pay— (a) any amount payable to the Commissioner under this or any other Act in relation to that amount, including any interest and penalty tax; and (b) any costs and expenses incurred in relation to the recovery of that amount that the Commissioner is entitled to recover from any such person. (4) A person who pays an amount in accordance with the liability imposed by this section has such rights of contribution or indemnity from the other person or persons as are just. (5) This section applies whether or not the person was an employer during the relevant period.