In determining whether a corporate group should fall within deemed grouping provisions of the Payroll Tax Act, State Revenue Office will after receiving an initial submission from the affected companies seek to answer these additional questions. It is prudent to consider these factors when preparing the initial submission anticipating that SRO will want this material in any event; however, it is smarter to draft the submission with these factors in mind. In meeting with Behan Legal, it will be critical that the following information and documents are available.
TRADE BETWEEN THE BUSINESSES
1 Is there transactions/trade between the businesses?
If yes, what is the purpose of those transactions?
2 What is the level of trade and/or transactions between the businesses i.e. the percentage of trade between the two businesses compared to the total transactions?
3 Are these transactions conducted on normal commercial terms, or are discounts provided?
4 Do the purchases of one of the businesses constitute a large proportion of the sales of the other business?
5 Are there shared expenses?
If yes, does a management agreement exist?
6 Are there any inter-company agreements?
SHARING OF RESOURCES BETWEEN THE BUSINESSES
7 Do the businesses share resources, including premises, staff, and management and accounting services?
8 Do employees of one business also perform services/duties in relation to the other business?
If yes, provide details.
9 If there is sharing of resources, is there any charge made? If there is a charge, is the charge reasonable given the type of resource shared and the level of such sharing?
10 Who prepares the books of account and wage records for each business? Where are these records located?
COMMON MANAGEMENT BETWEEN THE BUSINESSES
11 Describe the roles of the managers for each business.
12 Is the same person or are the same people responsible for the day-to-day operation of the businesses?
13 If so, are operating decisions of one of the businesses made with the impact of such decisions on the other businesses in mind?
14 Are the managers of the businesses, under the control, or obliged to follow, the directions of other persons?
15 Who authorises payments for purchases and capital expenditure for each business (i.e. who are the cheque signatories)?
COMMON FINANCIAL ARRANGEMENTS BETWEEN THE BUSINESSES
16 Do the businesses have common financial arrangements?
17 Have the businesses sought finance as a group, from a financial institution?
If yes, are there 'cross-securities' for such arrangements between the businesses?
18 Are there loans between the businesses?
19 If there are loans between the businesses, do written loan agreements exist?
20 Is a reasonable rate of interest charged on the loans?
21 Are regular repayments required to be made?
22 Are there lease agreements in place in relation to the premises occupied by the companies?
Provide a copy of any agreements
23 Which entity is billed and pays the council rates and utility accounts?
Provide sample invoices
COMMON CUSTOMERS BETWEEN THE BUSINESSES
24 Is there a relationship between the customers of each of the businesses?
25 Do the customers of one of the businesses automatically become customers of the other businesses?
26 Do the businesses provide complementary services to their customers?
27 Is there some connection between the nature of the business (does one of the businesses add value to goods or services provided by the other business)?
WHAT IS THE EXTENT OF THE CONNECTION BETWEEN THE BUSINESS OWNERS?
28 Are the same people the owners of the businesses?
29 Are the owners of the businesses closely related?
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Behan Legal assists and advises on these important issues. For an appointment, call 03 9646 0344