Synchron wins battle on payroll tax

Synchron wins battle on payroll tax

After five years of fighting for reform, Synchron has announced it has won the battle on the issue of payroll tax, which it said could have put financial advice groups out of business.

In a statement, the non-aligned dealer group said the State Revenue Office (SRO) Victoria has issued a letter to Synchron's lawyers, agreeing with the firm's argument that authorised representatives are not employees or relevant contractors for payroll tax purposes.

The SRO had previously assessed that Synchron was liable to pay payroll tax in relation to the commission and fees it collects on behalf of some of its advisers.

This meant potentially all licensees would have had to pay around 5 per cent payroll tax on the gross revenue for their authorised representatives for the past seven years.

On 1 June, however, the SRO forwarded a letter to Synchron's lawyers.

"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.

Synchron director John Prossor said: "We believe that's the correct and just outcome from this matter, firstly for Synchron and its authorised representatives, but also for the industry at large."

The case began after the Harmonisation of Payroll Tax in Australia was put in place, which saw the removal of a NSW exemption for authorised representatives of AFSLs.

Synchron director Don Trapnell said the SRO's assessment would have meant "a huge tax bill for licensees and had the potential to send smaller licensees broke".

"In effect, the SRO was trying to apply payroll tax in relation to the smallest of small businesses – advisers who have just started out, or those who choose not to employ anyone," he said.

The group's independent chair, Michael Harrison, added that the assessment was also contrary to the government's desire for business modernisation.

"In today's world, advisers don't have the same need to employ physical staff," he said.

"They use software and virtual assistants such as paraplanners who work within other organisations to do many of the tasks required in a financial advice business.

"The way we do business has changed with the times, but with its focus on the number of employees within a financial advice business, the SRO did not recognise this; it did not recognise these businesses as small businesses in their own right," he said.

Synchron wins battle on payroll tax
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