Snowy Monaro Regional Council v Chief Commissioner of State Revenue

[2017] NSWCATAD 14

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(Judgment by: R Hamilton SC, Senior Member)

Snowy Monaro Regional Council
v Chief Commissioner of State Revenue

Court:

Judge:
R Hamilton SC, Senior Member

Legislative References:
Payroll Tax Act 2007 - The Act
Pay-roll Tax Act 1971 - The Act
Taxation Administration Act 1996 - The Act

Case References:
Australian Nursing Federation v Alcheringa Hostel Incorporated - [2004] FCA 375

Other References:
Jurisdiction: Administrative and Equal Opportunity Division
File Numbers: 1610391

Hearing date: 4 November 2016
Judgment date: 12 January 2017

Sydney

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Judgment by:
R Hamilton SC, Senior Member

DECISION

The decision of the Chief Commissioner is revoked.

REASONS FOR DECISION

1 The issue to be resolved in this case is whether the Yallambee Lodge Aged Care Facility conducted by the Applicant local Council ("the Council") in Cooma NSW is a "hostel" within the meaning of s60 of the Payroll Tax Act 2007 [PRTA 2007].

2 The matter comes before the tribunal in the following way:

(1)

By email dated 11/12/13 the Chief Commissioner advised the Council that it was not liable to payroll tax on wages paid to staff at the Yallambee Lodge Aged Care Facility (page 30 s58 documents).

(2)

By email dated 16/10/15 the Chief Commissioner advised the Council that on a reconsideration he had decided that the Council was liable to payroll tax on the abovementioned wages but that the Chief Commissioner would only require payroll tax to be applied from 1 July 2015 (page 44 s58 documents).Accordingly the Tribunal is considering the position from that date.

(3)

On 11/12/15 the Council lodged an objection against the Chief Commissioner's decision (page 45ff. s58 documents)

(4)

On 2/5/16 the Chief Commissioner disallowed the Council's objection (page 55 s58 documents).

(5)

On 27/6/16 the Council lodged an application with this Tribunal.

3 Section 86 of the Taxation Administration Act 1996 (TAA) permits a taxpayer dissatisfied with an assessment or a decision of the Chief Commissioner to object; s. 96 TAA permits a dissatisfied taxpayer to lodge an application for a review with this tribunal.

4 The answer to the question to be resolved as to whether the Council is liable to be payroll tax on the wages paid to the staff of the Yallambee Lodge Aged Care Facility depends on the meaning of "hostel" in its ordinary meaning considered in the context of the Payroll Tax Act 1997 and its history. It is not defined in PRTA 1997.

LEGISLATION

5 PRTA 2007 provides as follows:

Section 58: "Local and county councils

Subject to section 60, wages are exempt wages if they are paid or payable by a council or county council, within the meaning of the Local Government Act 1993."

Section 60: "Limitation on local government exemptions

(1) An exemption under this Division does not apply to wages paid or payable for or in connection with:

(a)

any of the activities referred to in subsection (2), or

(b)

the construction of any buildings or works, or the installation of plant, machinery or equipment for use in any of the activities referred to in subsection (2).

(2) Subsection (1) applies to the following activities:

(a)

the supply of electricity or gas,

(b)

water supply,

(c)

sewerage,

(d)

the conduct of:

(i)

abattoirs,

(ii)

public markets,

(iii)

parking stations,

(iv)

cemeteries or crematoria,

(v)

hostels,

(vi)

an activity prescribed by the regulations,

(e)

an activity specified in Schedule 2."

Schedule 2

Division 3 Local government

11 Limitation on local government exemptions

For the purposes of section 60 (2) (e), the following activities are specified:

(a)

the supply of liquefied petroleum gas or hydraulic power and the supply and installation of associated fittings and appliances and of pipes and apparatus,

(b)

the operation of a transport service,

(c)

the supply of building materials,

(d)

the operation of a coal mine and the supply and distribution of coal.

6 The Regulations do not contain anything relevant.

7 The evidence before the Tribunal in addition to the s58 documents consists of the following:

(1)

Affidavit 1 of Stephen Molloy, a Council officer, dated 6 September 2016 which annexed the following:

(a)

Resident Handbook of Yallambee Lodge Hostel

(b)

Australian Government Dept of Human Services – Aged Care Assessments and How assessment works (printouts)

(c)

Australian Government Dept of Health – Schedule of Fees & Charges for Residential and Home Care

(2)

Affidavit 2 by Mr Molloy dated 31 October 2016 with no attachments.

(3)

An affidavit by Marianne Dakhoul of the Crown Solicitors Office dated 10 October 2016 and Exhibit MD-1.

8 Mr Molloy states that Yallambee Lodge was built in 1995. It has evolved over time from providing basic services (called "low care") to aged persons, into a specialised aged care facility providing palliative care and assistance to its elderly residents with complex personal care needs (called "high care"). Yallambee Lodge has 40 beds, with 38 for permanent residents and 2 for respite care.

9 The Exhibit MD-1 contains copies of documents from various websites: the Australian Government Aged Care Quality Agency; the Council's website and including Council meeting business papers, General Purpose financial statements, and service delivery program; Aboriginal Hostels Limited; and archived documents concerning Commonwealth Hostels Limited.

10 The Resident Handbook states:

"Yallambee has five residential Houses, all connected by covered walkways to the central Administration Building. This building has a communal lounge area, a communal dining area, the main kitchen, and designated offices and staff areas.

Each residential House has eight single bedrooms with ensuite bathrooms, a communal kitchen and a dining area, a lounge room, a quiet lounge and a communal laundry".

3. ACCOMMODATION

All accommodation is single room with ensuites. You are encouraged to furnish your room with private belongings and decorate it to suit your own taste. A television and telephone outlet is supplied in each room. Connection arrangements and costs are the responsibility of the resident/representative. A shower chair is provided in each room and toilet seat raisers are available. Respite rooms are fully furnished. Please provide a rubber-backed mat to go under any large recliners.

•

LINEN: sheets, towels and face washers are provided. If you choose to have a double bed you will need to supply sheets as we only stock king single. Pillows are available or you can bring your own from home.

•

CLEANING: bedrooms are cleaned weekly or more often if necessary. You will be informed of which day your house is cleaned when you arrive. If you have any special requests please inform the staff. If you would like to help by making your bed or dusting your shelves, you are encouraged to do so…

•

LAUNDRY: our laundress will attend personal laundry and linen daily, Monday to Friday. Care staff will wash wet or soiled items over the weekend. Linen is changed weekly (or as needed) and on admission you will be informed of which day your sheets will be attended… If you have delicate items such as woollens please discuss with the laundress or arrange for family to attend to these items. If you would prefer your family attend all of your washing, please inform the staff. Residents are able to do their own washing with prior arrangements and instruction on the individual machines…

4. CATERING

All meals are prepared fresh on site by our catering staff. We try to offer a wide variety of choice and will ask you to fill in a likes and dislikes register and any details of special requirements … you are able to invite guests to dine with you for a minimal charge of $5.00 per person. Please inform staff as early as possible for catering purposes.

Morning and afternoon tea and supper are served each day. Residents can also supply a thermos for staff to fill at night if they wish. Residents who are ill will be served meals in their room otherwise you are encouraged to attend the dining room. Please inform the staff if you are unwell.

Staff will assist you with filling in your menu each day…

5. PERSONAL CARE

Staff can assist you with the following:

•

Showering, drying and dressing.

•

Grooming and shaving.

•

Toileting.

•

Continence requirements.

•

Mobility and transfers.

•

Assistance with meals, cutting up food and eating.

•

Wound dressings.

•

Collecting pathology specimens.

•

Supervising medications and injections.

•

Monitoring blood pressure, weight and blood glucose.

•

Cleaning and fitting of aids such as glasses and hearing aids.

On admission the Clinical Care Co-ordinator will assess your needs with you and your representative. We can assist with additional care needs as required.

6. HEATH [SIC] SERVICES

Staff can assist you with making appointments with your chosen healthcare providers. Assistance with transport arrangements will be offered and if required staff will drive you to your local appointments…

7. RESIDENT LIFESTYLE

We aim to assist you with maintaining your personal and social lifestyles after admissions to Yallambee. You are encouraged to continue participation in clubs, groups and family activities. Staff can assist you with attending meetings or outings…

LEAVE:

You are entitled to unlimited hospital leave and up to 53 days social leave a year. Social leave can be taken from up to 7 days at a time. Please see the manager if you need to be away for any period longer than 7 days and she will be able to advise you further.

8. SECURITY OF TENURE

Once you have moved into your room, it is regarded as your home for the duration of your stay. You will not be asked to move to another room unless you express a desire to move to a room that has become vacant. [emphasis added]…

If you ever require alternative accommodation at another facility, management will discuss this with you, your family or representative, your doctor and the Aged Care Assessment Team.

Residents, families or representatives may be asked, under exceptional circumstances, to find alternative accommodation. These circumstances may include:

•

Excessive violence/aggressive behaviour.

•

Habitual drunkenness and/or disorderly conduct.

•

Verbal or physical abuse of staff or residents.

•

Chronic non-payment of accounts.

•

Behaviours putting others at risk e.g. Smoking outside designated areas."

11 The Yallambee Lodge Aged Care Facility states on its website homepage (as quoted in submissions) as follows:

"Who is eligible for care in Yallambee?

Anyone who is assessed as eligible for residential permanent or respite care by the Aged Care Assessment Team (ACAT).

Who will deliver the care involved?

We have a diverse range of care staff at Yallambee. We have Registered Nurses, Enrolled Nurses and Carers. Your care will be delivered by people who are familiar with, and trained to give care appropriate to your needs. A Registered Nurse is on call 24 hours a day. All care will be assessed, and monitored, by a qualified nurse.

How do I qualify for a bed at Yallambee Lodge?

Contact the Aged Care Assessment Team (ACAT) who are based at Cooma Community Health on … You can also contact My Aged Care on … or visit the My Aged Care website for more information.

If I have been assessed what is my next step?

You need to make an appointment so that the Manager is able to take a brief history and place your name on the waiting list. Please phone beforehand for an appointment for further details. The person to contact is: …

What will happen at that appointment?

Your present living and caring arrangements will be discussed in confidence, your specific needs will be determined, and you will be placed on our waiting list. As our beds are limited in number and the need for beds is prioritised, you may not be able to be allocated a bed immediately, so please do not make any changes to either your living or existing care arrangement. It is impossible to give your (sic) or your family any estimation of waiting time for a bed. You will also have a tour of the facility.

Do people with more money get preference?

Income does not determine who receives care. Those with the greatest care need will receive care before those with a lesser need.

Will I have to pay anything to stay in Yallambee?

Yes. All people at Yallambee pay a daily care fee which is determined by the government…"

12 The materials from the website from the Australian Government's Department of Human Services about assessment for aged care notes that the Aged Care Assessment Program is administered by the Department of Health (DOH). The program is a cooperative working arrangement between the Australian and State and Territory governments to operate Age Care Assessment Teams (ACATs) across Australia. It goes on to say:

"Aged Care Assessment Teams

ACATs assess the care needs of older people and help them access the most appropriate types of care, including approval for Australian government subsidised care services.

A person may be approved to receive one or more of the following types of care:

•

Residential Care

•

Residential Respite Care

•

Home Care

•

Transition Care

Read more about Aged Care Assessment Teams on the My Aged Care website…

Screening

My Aged Care contact centre staff will ask the client or their representative a series of questions over the phone. The questions will help staff understand the client's needs and determine if the client requires a home support assessment or comprehensive assessment.

Comprehensive Assessment

The ACAT will conduct a face to face comprehensive assessment to determine a client's eligibility for care under the Aged Care Act 1997 with approval subject to a decision by an ACAT delegate…"

13 Mr Molloy also attached a copy of the My Aged Care eligibility and assessment criteria from the Australian government website.

"How Assessment Works

If you need a bit more help with basic tasks at home or you need more intensive aged care services, the My Aged Care contact centre can help you. They will work out the support you need and whether you require an assessment to access services….

… If you are seeking assistance to access aged care services, contact centre staff will register you with My Aged Care. The my Aged Care contact centre staff will ask you a series of questions in order to understand your needs.

•

Any support you are currently receiving.

•

If you have any health concerns.

•

How you are managing with activities around the home.

•

Some questions relating to your safety in the home.

During the conversation, they will discuss some options with you which may include being referred for a home support assessment, a comprehensive assessment or a direct referral to services (where appropriate).

TYPE OF ASSESSMENT

Home Support Assessment

The My Aged Care contact centre staff may organise a home support assessment if you have entry level aged care needs which will allow you to remain living at home and in the community safely. A home support assessment built on the information you have already provided to My Aged Care. A home support assessment will be undertaken by a local assessor from the My Aged Care Regional Assessment Service.

Comprehensive Assessment

An Aged Care Assessment Team (ACAT, or ACAS in Victoria) may be organised if you have more complex aged care needs and wish to access government funded services to help you remain living at home, or if you are considering moving into an aged care home. It may also be organised if you are ready to leave hospital, or if you need a short break in an aged care home (also called "respite care")."

CONSIDERATION

14 The Macquarie Dictionary defines a hostel as follows:

"noun. 1. A supervised place of accommodation, usually supplying board and lodging, provided at a comparatively low cost, as one for students, nurses etc. 2. Youth hostel. (A simple lodging place for young travellers)."

15 The Oxford English Dictionary second and third edition relevantly defines "hostel" as follows:

"1. A place of sojourn; a house where one lodges; a lodging. 2. A public house of lodging and entertainment for strangers and travellers; an inn, a hotel. 3. A house of residence for students at a university or elsewhere…"

16 Both dictionary definitions use the word "lodging" which implies temporaneity. So too does the word "sojourn".

17 The meaning of "hostel" in the context of Commonwealth aged care legislation prior to 1997 was discussed by Ryan J in the Federal Court in the case of Australian Nursing Federation v Alcheringa Hostel Incorporated [2004] FCA 375]. The case involved industrial law issues concerned with the relevant award covering aged care nursing staff.

18 His Honour said as follows:

"5 Before 1997, a distinction was drawn between two types of residential aged care facilities; "nursing homes" and "hostels". Nursing homes were regulated by the National Health Act 1954 (Cth) and traditionally cared for aged persons who required a high level of nursing care. Hostels were regulated by the Aged or Disabled Persons Homes Act 1854 (Cth) and traditionally catered for person for whom a generally lower level of nursing care was appropriate. Hostels, therefore, were unable to care for residents who, from the outset, required a high level of nursing, or who came, with advancing years, to need a higher level of care than had been appropriate when first they went into residence.

6 In 1997, provisions for the regulation and funding of nursing homes and hostels were consolidated in one Act, the AC Act. The AC Act removed the distinction between hostels and nursing homes, providing instead for minimum standards to be observed by residential aged care facilities generally. As a result of this change, it is now possible for a residential aged care facility to provide care to residents who variously require either a high or low level of care. This has further been facilitated by the Commonwealth Government's policy, adopted in October 1997, of 'ageing in place'. This policy enables a person to remain in a facility, to which he or she was initially admitted as a low care resident, after the person has come to need a higher level of care. Before 1997, such a resident would have been forced to move from a hostel to a nursing home."

Although this decision concerned different legislation at a different time it perhaps indicates the distinction that used to be drawn by legislation, and probably in the public mind, between a hostel and a nursing home facility providing high care to elderly persons and may help to inform the use of the word hostel in PRTA 1997.

19 It appears to me that the essential features of a hostel in its ordinary meaning involve:

•

A notion of transience - in that the hostel is used for a limited time or limited purpose - or both (for example a student hostel, provides a place of temporary residence for the purpose and during the period of education and training. A youth hostel provides a place of temporary residence for mostly young travellers. Aboriginal Hostels Ltd in its annual report states that it provides "short-term accommodation" for indigenous persons who have moved from home for work or study (Exh MD-1 p.261). Commonwealth Hostels Ltd documentation states that it provided accommodation for 3 to 12 months for new migrants Exh MD-1 p.274).I note that the Chief Commissioner accepts that a hostel has an aspect of impermanence (Respondent's Submissions par.18).

•

There is no right or expectation of permanent residence - generally hostel dwellers need to leave when the reason for their presence is over (for example when their education or training is complete).

•

A low level of care and service from the hostel operator (guests will usually be expected to look after themselves to a considerable extent - for example doing their own laundry, providing their own linen, often buying their own food and cooking for themselves, and attending to their own personal and medical needs).

•

Often there will be various shared facilities such as kitchens and bathrooms and laundries - though having a private room with an ensuite bathroom would not disqualify the accommodation from being a hostel.

•

A hostel often provides only simple amenities though it need not offer spartan conditions to qualify as such.

•

Usually it is low cost by comparison with other forms of temporary accommodation such as hotels because of the low level of service and amenity.

•

Frequently there are special qualifications to entry into the hostel (for example: to be a student, a nurse in training, an indigenous job seeker, a recent migrant etc). However hostels are generally open to the public or a section of it provided that applicants meet entry qualifications.

20 In the present case I find that the element of transience is not present. 38 out of 40 beds are occupied by permanent residents. 2 beds are used for respite care but this is not material. The Residential Handbook states under the heading "Security of Tenure" that the residents are to treat Yallambee Lodge as their home for as long as they stay. Their stays are long term. 61 months is the average, and 41 months if they pass away (Molloy Aff.1, par.13) Residents are encouraged to furnish and decorate their room to their own taste. There is limited ability to leave Yallambee Lodge without losing one's place at the aged care facility. Leave is restricted to 53 days per annum in blocks of 7 days, except for medical reasons.

21 I also find that the level of care provided by staff is high. Staff attend to resident's personal bathing, dressing, feeding and medical needs. The staff working at the aged care facility are in the main especially qualified for the task as Nurses or carers. This too sets it apart from what is usually provided in a hostel.

22 Although there are shared facilities for dining and recreation at Yallambee Lodge residents enjoy self-contained single accommodation with ensuite bathrooms. This is to be expected in an aged care facility conducted to permit residents to "age in place".

23 The process of qualifying or being assessed for acceptance as a resident at Yallambee Lodge is somewhat complicated and involved an in-depth external assessment of an aged person's needs, health and means by a team charged with this duty by the Commonwealth government.

24 The cost of residing at Yallambee lodge is subject to a means test, but can involve payment of a refundable deposit of up to $350,000; plus a daily fee or fees (Molloy Aff.1 pars. 17 and 18). This could not be regarded as 'low cost'.

25 The Chief Commissioner's representative has taken the Tribunal to the Second Reading Speech by Mr Askin (then Premier and Treasurer of NSW) when the predecessor to the present Act (i.e. the Pay-roll Tax Act 1971) was introduced to the parliament of NSW in 1971.

26 Prior to 1971, payroll tax was levied by the Commonwealth government. By agreement with the States the Commonwealth government ceded this source of revenue to the States commencing in 1971.

27 The relevant provisions of the 1971 Act were in all material respects very similar to the current provisions in the PRTA 2007 (set out above).

28 In his Second Reading Speech Mr Askin (at page 752-753 Hansard 26 August 1971) said:

"Provision has been made, of course, for the exemption of the non-business activities of Local government authorities in accordance with the terms of the Commonwealth's offer… It has been considered appropriate that, as long as the private sector continues to bear this charge, the public sector should do so also… In order to exempt the non-business activities of local government authorities as required in terms of the Commonwealth's offer, the bill provides for the State to exempt wages and salaries paid by authorities established under the Local Government Act other than for business activities as nominated by the Commonwealth. These activities are the supply of electricity or gas, water supply, sewerage, the conduct of abattoirs, public food markets, parking stations, cemeteries, crematoriums, hostels , and other activities that are trading undertakings within the meaning of Part XVII of the Local Government Act. This is a stipulation made by the Commonwealth. (Emphasis added)".

29 The parties have provided the Tribunal with a joint note relating to the history of the payroll tax legislation at the Commonwealth level. The Commonwealth legislation did not, according to the parties' researches, have an equivalent exemption within it so no particular assistance can be obtained from that part of the historical background.

30 The Chief Commissioner urged on the Tribunal an expansive definition of "hostel" relying on the proposition that if one of the Council facilities mentioned in s.60 PRTA 2007 could be seen as having competitors from the private sector any associated wages should not be exempt from payroll tax.

31 The parties debated before me the issue of whether this particular aged care facility was to be regarded as "commercial"; taking into account that it was conducted by Council which was bound by the Local Government Act to pursue its activities for the benefit of the community at large. There was also debate about the financial performance of the Yallambee Lodge Aged Care Facility and the use to which a surplus (if any) would be put. However, I did not find the debate of particular assistance in reaching a decision in this matter.

32 In this case I am not persuaded by the words of the Second Reading Speech to take a broad view of the meaning of the word "hostel" in s60 of the Payroll Tax Act 2007 as applied to the Yallambee Lodge Aged Care Facility.

33 I note that there is an exemption for wages paid by the Crown in relation to the Home Care Service of NSW (PRTA 2007 Sch.2, Item 9). I note that the ACAT team can assess an aged person as suitable for home support care or residential care. It seems anomalous that Home Care Services wages should be exempt, but that high care wages for services as provided by Yallambee Lodge would, on the Chief Commissioner's view, be subject to payroll tax.

34 It seems to me that an aged care facility of type offered by Yallambee Lodge would not have fallen within the intention of the legislature when enacting the provision, and that potential to compete with the private sector is not the axis upon which the definition turns. I note that Council documents in evidence occasionally use the word 'hostel' in reference to Yallambee Lodge (e.g. the Resident Handbook front cover; Exh.MD-1 p.92) but such use does not determine the issue. It seems to be a term left over from an earlier time than that in issue (i.e. post 1/7/15) It is the nature of the facilities at Yallambee Lodge that are critical.

35 In my view, it is much more likely that the legislature intended "hostel" to have its ordinary meaning to cover facilities providing temporary accommodation, with minimal services and basic comforts at a low cost and a low level of care from the operator.

36 In the present case residents of Yallambee Lodge, having met the stringent, externally imposed, entry assessment requirements, largely become permanent residents there for the rest of their lives. Yallambee Lodge becomes their home. They are provided with a high level of personal care and attention provided by specially qualified staff. Depending on their means they pay a relatively high cost.

37 Accordingly the decision of the Chief Commissioner is revoked.

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

Amendments

13 January 2017 - Amended decision from set aside to revoked.