The Federal Court and Administrative Appeals Tribunal have agreed with the ATO that a business, Sunraysia Harvesting Contractors Pty Ltd, was making use of a “sham” arrangement with three other companies to avoid pay as you go (PAYG) and payroll accounting responsibilities

The Federal Court and Administrative Appeals Tribunal have agreed with the ATO that a business, Sunraysia Harvesting Contractors Pty Ltd, was making use of a “sham” arrangement with three other companies to avoid pay as you go (PAYG) and payroll accounting responsibilities.

Sunraysia’s operators argued, unsuccessfully, that the three other companies employed Sunraysia’s workers, and those companies were responsible for PAYG deductions and payroll tax. The Federal Court said the arrangement was a “crude” structure with “no worth”, and ruled to deny Sunraysia’s input tax credits and impose penalties for GST shortfall and the business’s failure to meet its PAYG, payroll and other income tax obligations.