A Supreme Court of Queensland decision has highlighted
the broad scope of payments that are subject to payroll tax –
and the importance of getting the documentation right.
In Brisbane Bears – Fitzroy Football Club Ltd v
Commissioner of State Revenue, the court considered whether
payments made by the Brisbane Lions for players' and
coaches' 'image rights' were subject to payroll
Payments for 'image rights' or payments for
Each Brisbane Lions player entered into a 'standard playing
contract', which was an agreement between the player, the
Brisbane Lions and the AFL. The standard playing contract set out
the services to be performed by the player in his capacity as an
employee of the club, and the payments that the club would make for
The Brisbane Lions also entered into two other types of
agreements, referred to as 'additional services
a 'direct' agreement – where a player agreed to
perform additional services for the club for a fee; and
an 'indirect' agreement – where a player had
granted a related company a non-exclusive right to use his image,
and then the company agreed to grant the club the right to use that
image and procure the player to perform additional services, for a
The additional services were generally for the player promoting
and marketing the game – either in the media, making
appearances at community events or in marketing material. The
'additional services agreements' gave the Brisbane Lions
the right to use the player's image as part of providing those
The payments were not split between the services actually
performed and the use of a player's image. Instead, the
payments appeared to be treated as for the services, and the use of
the image was incidental to performing those services.
The Brisbane Lions argued that the payments in respect of the
use of the image were not subject to payroll tax because they were
not made in respect of services.
What payments are subject to payroll tax?
The court confirmed that there were issues to work through.
The first issue was whether the payments fell within the
definition of 'wages' – which is defined to mean
wages, remuneration, salary, commission, bonuses or allowances paid
or payable ... to an employee as an employee ...
The second issue was then whether the 'wages' were
liable to payroll tax, which in this case turned on whether the
payments were in respect of services performed or rendered.
The court rejected the Brisbane Lions' argument that the
payments were for 'image rights'. It concluded that:
for the 'direct' agreements – the payments were
made to the player as an employee in relation to the marketing and
promotional services performed; and
for the 'indirect' agreements – the payments were
deemed by a specific anti-avoidance provision to also fall within
the definition of taxable wages, even though a related entity
received the payment, rather than the player.
Is the decision only relevant for payments for image
No, the Commissioner will draw support from the decision where
payments are made to employees and directors, but the character of
these payments are unclear.
The case highlights the importance of carefully drafting
agreements. The court's role was to characterise the payments
that were made under the agreements, and it was unable to conclude
from the agreements that the payments were made in connection with
anything other than services. This was because the use of the image
rights was incidental to the performance of the players'
promotional and marketing activities.
The Commissioner is conducting extensive audit activity on
payroll tax matters at the moment. We recommend clients review
their payroll tax positions to minimise any possible exposures.
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Depending on the type of ETP, the employee's age and years of service, the amount may be taxed in various different ways.
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