Trinity College takes Commissioner for Taxation to Supreme Court over STARplex employee tax exemptions
An Adelaide college will battle all the way to the Supreme Court in a fight for tax exemptions that could have big consequences for SA’s priciest schools.
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One of South Australia’s largest schools is taking the tax office to court in a case that has the potential to affect the financial status of other prestigious colleges.
Trinity College Gawler has launched legal action in the state’s highest court against the Commissioner for Taxation arguing sports complex staff should be exempt from payroll tax.
Legal and corporate tax law experts warn the outcome of the test case could result in other schools with similar facilities having to pay the tax.
Schools do not have to pay payroll tax for staff members if they are engaged in work exclusively in providing educational services.
Another exemption is for non-profit organisations or for people “engaged exclusively in the provision of health services”.
Trinity argues its STARplex workers are exempt from payroll tax – calculated at 4.95 per cent of their salaries – because the staff provide health services to the community.
The Commissioner for Taxation has refused to exempt all but four of more than 100 full-time and casual staff, arguing they are not directly involved in providing those services.
DW Fox Tucker director and tax law specialist John Tucker said the court case had the potential to throw tax exemption status of similar employees at other schools into doubt.
He said the potential tax exemption was “serious money” and was calculated by adding all relevant salaries together and then finding 4.95 per cent.
“This is an example of Revenue SA taking a hard line of tax exemptions while the legal action is general resistance to that,” Mr Tucker told the Sunday Mail. “Revenue SA would be waiting to see how this litigation goes.
“Then other schools which have tax exemptions by providing benevolent services or other categories, might be challenged about whether that is what they are doing.”
STARplex is owned by Trinity and operates on its Gawler complex as a not-for-profit community sports centre, where any money made is put back into maintaining and improving the school.
It is used extensively during the day by the school but is also used at weekends and evenings by community sporting groups.
A gym and pool at the complex are open to the public for a membership fee.
The complex also includes a theatre, creche, shops, nutritionists, massage services and rooms for hire.
Court documents viewed by the Sunday Mail show STARplex ran at a loss of $1 million in 2015 and $668,000 in 2016.
“The facility is never expected to make a profit with health services to the community being the primary focus,” Trinity’s Supreme Court submissions said.
The school had paid full payroll tax for the STARplex employees since the complex opened in June 2000 but asked for an exemption in April 2017.
The school was granted partial exemption to four employees involved in “clinical physiology services and dietary services”.
Treasurer Rob Lucas disallowed Trinity’s objection to the decision in April 2018. Mr Lucas said the State Government could not comment on the case as it was still before the courts.
Head of Trinity College, Nick Hately, said the case was ongoing and there had been discussion between the college and the commissioner.
“We pride ourselves on being open to all and serving the wider community,” Mr Hately said.
“For 20 years, Trinity College has filled a gap in the local area through STARplex, sports, training, arts and recreation provider.”