Terry Shields Pty. Ltd. v. Chief Commissioner of Pay-roll Tax (N.S.W.)

Judges:
Lee CJ

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 17 July 1989.

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Lee C.J. at C.L.

These proceedings raise the question whether the provision by an employer of the use of a car for an employee's own private purposes is within the definition of ``wages'' in sec. 3(1) of the Pay-roll Tax Act 1971 so as to attract tax under that Act.

In December 1976 the plaintiff company, which carries on a business of selling motor cars, engaged Mr Michael Baxter as an employee, on three months' probation at a weekly salary of $190 per week. The managing director, at the interview at which Mr Baxter was engaged, told him: ``If you are satisfactory after three months we will also give you a second hand car for your use.'' In April 1977 the managing director informed Mr Baxter that he had worked well, and said: ``You can have a used car to drive home and to work.'' Mr Baxter is still employed by the company, now at a salary of $560 per week, and he has had the use of a car for his personal use during the period of his employment; he is entitled to drive it to and from work and have it at weekends for his own purposes. He also uses it for the plaintiff's purposes in the course of his employment. Mr Baxter does not have the use of the same car all the time but changes cars every three or four weeks. The cars provided are from the company's stock of cars held for sale. At the present the car which he uses is in fact owned by a finance company and bailed to the plaintiff under the well known floor plan system. Mr Baxter as well as other permanent staff, who have the use of cars, is required to inform the manager once he has driven the car between 1,500 and 2,000 kilometres and they then receive another car. The reason for this, according to the managing director (whose affidavit was filed in these proceedings) is ``to ensure that no used car unduly increases the number of kilometres it has been driven and thus prevent any unnecessary lowering of the price available on sale''.

In these proceedings the plaintiff is claiming a declaration that the wages paid by the plaintiff in the month of April 1989 in respect of Mr Baxter's employment and taxable pursuant to the Pay-roll Tax Act 1971, ``do not include any component on account of or calculated by reference to the provision by the plaintiff to the said Michael Baxter of a used Toyota passenger motor car''. The evidence before the Court is that at no time, whether at the time of Mr Baxter's engagement or throughout his employment has he made a bargain with the plaintiff or anyone on behalf of the plaintiff that in lieu of an increase in salary he will accept the use of a motor vehicle,

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nor has any agreement or understanding been reached by him with the plaintiff or any person on behalf of the plaintiff that a value be attributed to his use of a motor car owned by the company.

Counsel for the defendant Mr Downs Q.C. conceded that the plaintiff had a sufficient interest to claim the relief sought and accordingly that matter need not be further noticed.

The answer to the question whether the provision of the car for Mr Baxter's personal use constitutes wages taxable under the Pay-roll Tax Act 1971 turns upon the definition of ``wages'' in sec. 3(1) of that Act:

```wages' means, subject to subsections (2) and (5), any wages, salary, commission, bonuses or allowances paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to an employee as such and, without limiting the generality of the foregoing, includes -

• (a) any amount paid or payable by way of remuneration to a person holding office under the Crown in right of the State of New South Wales or in the service of the Crown in right of the State of New South Wales;
• (b) any amount paid or payable under any prescribed classes of contracts to the extent to which that payment is attributable to labour;
• (c) any amount paid or payable by a company by way of remuneration to a director or member of the governing body of that company;
• (d) any amount paid or payable by way of commission to an insurance or time-payment canvasser or collector;
• (e) the provision by the employer of meals or sustenance or the use of premises or self-contained accommodation as consideration or part consideration for the employee's services; and
• (f)...
• (g) any amount deemed by or under a provision of this Act to be wages.

(2) For the purposes of this Act -

• (a) meals or sustenance provided to an employee by an employer shall be taken to have a value of $63 per week (less any contribution paid to the employer by the employee) or, in any particular case or class of cases, such other value as is prescribed instead for that case or class of cases; and
• (b) self-contained accommodation provided to an employee by an employer shall be taken to have a value of $100 per week (less any contribution paid to the employer by the employee) or, in any particular case or class of cases, such other value as is prescribed instead for that case or class of cases; and
• (c) quarters provided to an employee by an employer shall be taken to have a value of $50 per week (less any contribution paid to the employer by the employee) or, in any particular case or class of cases, such other value as is prescribed instead for that case or class of cases.

(2A) For the purposes of this section -

• `quarters' means accommodation (such as a room in a boarding house or hostel) that is not self-contained accommodation;
• `self-contained accommodation' means accommodation (such as a dwelling-house or a unit in a residential flat building) that includes separate kitchen and bathroom facilities.

(3)...

(4) For the purposes of this Act -

• (a) any wages paid or payable to an employee, in respect of the employee's services as an employee of an employer, by a person other than the employer; and
• (b) any wages paid or payable by an employer, in respect of an employee's services as an employee of the employer, to a person other than the employee,

shall be taken to be wages paid or payable by the employer to the employee.

(5) A travelling or accommodation allowance paid or payable to an employee shall be regarded as an allowance for the purpose of the definition of `wages' in

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subsection (1) only to the extent that it exceeds the prescribed amount, or an amount calculated at the prescribed rate, that is applicable to the particular case.''

The plaintiff contends that the provision of the vehicle is not caught by the section whilst the Commissioner claims that the case is one in which the employee is receiving ``wages'' ``paid in cash or in kind'', made up of his weekly wage (it is called ``salary'' in the evidence but the words, for present purposes, are interchangeable) plus the use of the car, or he is receiving an ``allowance'' within the meaning of the section by the provision of the use of the motor car. I mention here that counsel for the plaintiff conceded that the provision of the car for the use of Mr Baxter was to be regarded as a term of the contract of employment between him and the plaintiff and I am of the opinion that if the use of the car did fall within the definition of ``wages'' in the section the requirement that the ``wages'' be paid to an ``employee as such'' would be satisfied in the present case. However, that consideration plays no part in the resolution of the problem arising in these proceedings.

Pay-roll tax was first introduced into Australia in 1941 by the Commonwealth as a wartime (temporary?) measure, pursuant to the Pay-roll Tax Act 1941 and the Pay-roll Tax Assessment Act 1941. Under the Pay-roll Tax Assessment Act 1941 the wages taxed were defined in sec. 3(1) in precisely the words now used in the present New South Wales Pay-roll Tax Act 1971 (with the exception of para. (a) and subsec. (5) of the New South Wales Act which was not present). The provision in subsec. (2) in the Commonwealth Act for valuation of meals and quarters was followed in the New South Wales Act until the passing by the New South Wales Act until the passing by the New South Wales Parliament of the Pay-roll Tax (Amendment) Act 1988 Sch. 4(1)(a) which expanded the section in regard to the accommodation being dealt with and increased the values hitherto assigned thereto. The last-mentioned Act also inserted subsec. (4) which had not been in the Commonwealth Act.

When the Commonwealth vacated the field of pay-roll tax in 1971 the New South Wales Act was passed, and it is sufficient to say that the local Act followed, with appropriate modifications where necessary, the scheme of the Commonwealth Act which made wages liable to pay-roll tax (sec. 6) and which required pay-roll tax be paid by the employer by whom the taxable wages were paid or payable (sec. 8). The New South Wales Act required the employer to be registered as an employer (sec. 12) and like the Commonwealth Act to file monthly returns (sec. 13). An amendment by Act No. 100 of 1988 should be noticed here for by it the word ``pay'' was inserted into sec. 3(1) and defined as follows:

```pay' in relation to wages, salary, commission, bonuses or allowances, includes provide, confer and assign.''

I shall return to the significance of this definition later on but, for present purposes, it is sufficient to repeat that the definition of ``wages'' in the Commonwealth Act was carried into the State Act and that the purpose of both Acts was the same, namely, to impose a tax on wages. It follows that decisions on the Commonwealth Act in regard to the meaning of ``wages'' have direct application in the interpretation of the New South Wales Act.

It will be observed that the definition of ``wages'' in sec. 3 of the local Act (like sec. 3 in its predecessor the Commonwealth Pay-roll Tax Assessment Act 1941) is one which provides that ```wages' means, subject to subsection (2) and (5), wages, salary...'' and this immediately directs attention to the meaning of the words ``wages and salary''. That they have a well accepted meaning in our community cannot be doubted. They refer to a sum of money which is agreed between an employer and employee to be the pay or remuneration for that employee's services. That concept of wages as an amount of money agreed to be paid is not a novel one but one which goes back into history. One hundred and twenty years ago Martin B. in
Reeve v. Reeve (1858) 1 F.&F. 280 spoke of wages as follows:

``The question is whether there is a bargain for wages; because if work is done and there is no bargain for payment, either express or to be implied from such circumstances as show an understanding on both sides that payment shall be made, an action cannot be maintained for remuneration merely because it may appear to be reasonable.''

In the same year, in
Gordon v. Potter (1858) 1 F.&F. 644, which was an action by what we would call ``a live-in'' cook and housekeeper for damages for wrongful discharge without

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wages or warning, Mr Justice Hill directed the jury that a master had a right to discharge a servant ``simply by payment of a month's wages'' with no allowance for keep or ``board wages'' as the report referred to them. The definition of wages in the Commonwealth Act (as in the State Act para. (e)) made a special provision in para. (d) for the case where the employer provided food or keep, and this was necessary if the Act was to operate upon them because the ordinary meaning of wages would not include such. I will return to para. (e) a little later.

``Wages'' meaning an amount agreed to be paid to an employee is the meaning adopted in the Industrial Arbitration Act 1940 (N.S.W.) sec. 5 (as amended) under which elaborate provision is made for the making of awards which fix ``rates of wages'' and ``allowances as compensation for overtime, holidays or other special work'' (sec. 22 and 30). The system of ``pay as you earn'' taxation found in the Commonwealth Income Tax Assessment Act 1936 (as amended) Pt 6 Div. 2 rests on the employer deducting from the wages he pays to his employees an amount of tax made referable to the amount of wages paid. The words of Nathan J. in
Commr of Pay-roll Tax v. Reserve Bank (1987) V.R. 241 at p. 252 are pertinent to the matter here under consideration:

``Payroll tax within the common law world is an antipodean impost. Nothing from the northern hemisphere will aid in interpreting its scope. However, it is known in some civil law countries of Europe, for example West Germany and Austria. The term `payroll' is unknown to the authors of the Oxford English Dictionary but in Australia it is defined in the Macquarie Dictionary as: `a roll or list of persons to be paid, with the amounts due: the money that is actually paid out' and `payroll tax' is defined as: `a tax levied by a government on employers based on the wages and salaries they pay out'. The term was described in
Mutual Acceptance Co. Ltd. v. F.C. of T. (1944) 69 C.L.R. 389 as a figure of speech to give some indication of the subject taxed: at p. 403, per Dixon J. It is necessary, in my view, to direct attention to the meaning of `payroll' just as it is necessary to consider what is a `tax on wages' for the reasons given by Murray and Brooking JJ.

To do so I shall not rehearse the legislative or fact situation stated in the judgment of Murray J. with whom I agree, but I concur forcefully with his conclusion and that of Brooking J., whose draft judgments I have read, that the correct approach here is to ascertain what is a `payroll tax on wages' being the area vacated by the Commonwealth and not that area which the State may recite as such, namely sec. 3 and 3A of Act No. 9837. In my view, that search is assisted by characterising what is the payroll upon which the tax is levied. That word has, as I have said, a common meaning in Australia as well as that legislatively ascribed to it; and as with any vernacular word is subject to changes in content: see also E.F. Mannix, Australian Payroll and Incentive Tax, 1970, p. 37. For example, a newspaper report that a drug addict had robbed the payroll of the shopkeeper would be readily comprehensible now; it might not have been so in 1940. The reader would know the villain had stolen the cash or cheques which the shopkeeper was to pay in specie to his workers.''

The very reason why the reader would think, as Nathan J. says he would, is without doubt, in my view, also the very reason why it has never been suggested in the 48 years since pay-roll tax was introduced into this country, that ``wages'' as defined in sec. 3 of the Commonwealth Pay-roll Tax Assessment Act 1941 and the New South Wales Pay-roll Tax Act 1971 included personal use by the employee of the employer's car.

The cases (referred to hereafter) decided in the High Court on the meaning of ``wages'' in the Commonwealth Pay-roll Tax Assessment Act accept, in my view, the concept of wages as a monetary amount agreed to be paid for services although acknowledging, of course - without any discussion - that the section permits wages to be paid ``in cash or in kind''. What do those words mean? There are many decisions on the meaning of the word ``cash'' but the context in which the word is used controls its meaning. See the cases cited in Stroud's Judicial Dictionary Vol. 1 p. 371. In The Shorter Oxford English Dictionary (3rd ed.) 1944, the words ``in kind'' are defined as ``(tr L. in spec i.e.: see Specie). a. In the very kind of thing in question; usually of payment: In

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goods or natural produce, as opp. to money. b. Of repayment: In something of the same kind as that received (chiefly fig.).'' In the definition section ``in cash or in kind'' may well mean no more than payment in something which is the equivalent of actual cash (coin) e.g. cheque, promissory note or the like but, in my view, whether it means that, or whether it means taking goods (with all the generality implied in that word) or produce in lieu of cash, the words ``in cash or in kind'' do not alter the meaning of the words ``wages, salary, commission, bonuses or allowances'' used in the definition section. Counsel for the Commissioner appeared to suggest that, merely because one has a wage paid by the employer and use of the car by the employee, that combination constitutes ``wages'' paid partly in cash and partly in kind and the use of the car is thus caught by the definition. But that proposition would distort the ordinary meaning of wages and it is that meaning which the section is intending to preserve. Reference may be made here to
Scott v. F.C. of T. (1966) 117 C.L.R. 514 where the same approach to the meaning to be given to a word in a taxing statute was made by Windeyer J. A solicitor, who had acted for many years for a client and been paid proper remuneration, was given $10,000 by the client. The Commissioner of Taxation sought to include the gift as the solicitor's income because sec. 26(e) of the Income Tax and Social Service Contribution Assessment Act 1936-1961 defined ``assessable income of the taxpayer'' to include ``(a) the value to the taxpayer of all allowances, gratuities, compensation, benefits, bonuses and premiums allowed, given or granted to him in respect of or for or in relation directly or indirectly to any employment or services rendered by him...'' Windeyer J. held that the gift was not ``income'' within the Act, because the word ``income'' was to be taken to be a reference to what is already by its nature ``income'' and the gift was not such; the Act was not seeking to make ``income'' that which was not income according to ordinary concepts. To come within the class of case where wages are paid ``in cash or in kind'' (which would include partly in cash and partly in kind) would be a case where, for instance, the agreed salary was say $560 but the employer paid only $500 in cash but also provided a car for the employee's own use to cover the balance. ``Payment in cash or in kind'' in the definition means payment of a specific amount of the wages agreed, in other than cash. The concept of taking ``kind'' in lieu of cash in the discharge of an obligation is, as Lord Evershed said in
White v. Elmdene Estates Ltd. (1959) 2 All E.R. 605 at p. 611 ``well known'', but the evidence here admits of only one conclusion, namely, that a full salary or wage of $560 is paid to Mr Baxter weekly and, in the present case, there is no way in which the provision of the car for his use can be regarded as payment or part payment ``in kind'' of those wages.

I have thus far dealt with what I regard as the ordinary meaning in our community of ``salary'' and ``wages'' namely, a monetary amount agreed to be paid by an employer to an employee and it is appropriate now to determine whether decisions in the High Court demonstrate that that is the meaning attributed to the words ``salary'', ``wages'' in the definition of ``wages'' in sec. 3(1). In
F.C. of T. v. J. Walter Thompson (Aust.) Pty. Ltd. (1944) 69 C.L.R. 227 Latham C.J. considered the definition of ``wages'' in the Commonwealth Act in a case which was concerned substantially with the question whether a particular contract between the respondent and another was a contract of employment or a contract of services. At pp. 233-234 he said:

``If a fee is really a reward for services rendered by a servant, then it falls within the category of wages or possibly salary. Where the engagement is for a period, is permanent or substantially permanent in character, and is for other than manual or relatively unskilled labour, the remuneration is generally called a salary. But no precise line can be drawn between wages and salary.

...

In my opinion, in the Pay-roll Tax Assessment Act the word `wages' should be held to include any remuneration paid or payable to an employee as a reward for his services as an employee.''

Mutual Acceptance Co. Ltd. v. F.C. of T. (1944) 69 C.L.R. 389 was a case which raised the question whether an allowance paid by the appellant to its travellers, who used their own cars to carry out its business, fell within the meaning of ``allowance'' in the definition of wages. Latham C.J. pointed out at p. 395 that

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there were some ``allowances'' which ``might fairly be described as part of wages in the ordinary sense'' and thus the word ``allowance'' used in the definition had therefore to be given a meaning that did not include those. Rich J. (p. 399) thought that the ``allowances'' referred to in the definition were ``in the nature of remuneration akin to wages, salary, commissions or bonuses''. Dixon J., as he then was, dissented as to the precise content of ``allowance'' in the section but there is no doubt that he regarded the words ``wages, salary, commission, bonuses or allowances'' as all referable in their nature to specific monetary amounts which the employee was entitled to receive in his employment, whether paid in cash or in kind. He explained his approach to the meaning of the words in this way (pp. 402-403):

``The question we must decide turns, in my opinion, upon the meaning in this context of the word allowance. For I cannot think that the ordinary meaning of the word `wages' would cover the payments with which the case is concerned.

`Allowance' is one of the many words which take their meaning from a context rather than affecting or controlling the meaning of other words of the context in which they occur. For, considered alone and at rest rather than at work with other words, it means the allowing of a thing or a thing allowed. It is only by its application that you discover the kind of thing in mind.

In the present case I think that the whole context and subject matter shows that the definition of wages is dealing with the emoluments of employment paid in money or made over in kind to an employee by an employer. The figure of speech `pay-roll' used to describe the tax and supply a title to the Acts gives some indication of the subject taxed. In the definition of `wages' the two first words `wages' and `salary' refer to ordinary forms of remuneration for work done. `Commission' covers percentage rewards and `bonuses' occasional or periodical additions whether contracted for or voluntary. The next word `allowances' seems to me naturally to follow as an attempt to make sure that any other kind of gain or reward allowed or conceded by the employer to the employee for his work is brought within the definition. In language borrowed from Lord Esher, it is intended to cover any payment beyond the agreed salary of the employee for services or additional services rendered by him (
Burgess v. Clark (1884) 14 Q.B.D. 735 at p. 738). That remuneration for work is the subject is further shown by the four specified cases I mentioned above as included in the definition.''

(The emphasis is mine.)

The judgment of Williams J. at p. 406 makes plain that he also considered ``allowances'' to be monetary allowances. I do not make further reference to authority, for it is sufficient to say that I have been unable to find expression, in any case dealing with ``wages'' as defined in the Commonwealth Act and New South Wales Act, of a notion that ``wages'' could be considered as including a mere benefit to an employee such as use of the employer's car.

In the light of the citations above set out, I am of the view that the definition of ``wages'' in the Act is not intended to attribute to the words ``wages, salary'' used in the definition a meaning other than their ordinary meaning and that the meaning is one which contemplates an agreement between employer and employee that an agreed amount of money shall be paid as wages. The definition of ``wages'', as I have said, in using the words ``paid or payable (... in cash or in kind)'' in no way alters the meaning of the word ``wages'' as being the monetary amount agreed upon as the price or remuneration for the work done by the employee. It is of significance that in the one instance where the section deals with a provision of other than agreed monetary reward there is a specific provision in subsec. (2) to give that provision a precise monetary import. If the Commissioner is right here as to the meaning of ``wages'' or ``allowance'' the need for para. (e) disappears. True the section states that the provisions in (a) to (g) are not to be taken as ``limiting the generality'' of the words that have gone before but the whole structure of the definition section preserves the concept that ``wages'' as defined refers basically to money, and special provision needs to be made when the employee is paid wages and given something else that is not money.

On any view, Mr Baxter is paid a weekly wage of $560 and over and above this he has the use of the car provided by his employer for his own purposes. The payment of the amount of $560 is a payment of ``wages'' or ``salary''

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within the ordinary meaning of those words in the definition of ``wages'' and the provision of a car for private use is certainly not within the concept of wages as understood in this country. It does not therefore come within the words ``wages'' or ``salary'' used in sec. 3(1).

The matter then requiring consideration is whether the provision of the motor car falls within the expression ``commission, bonuses or allowances'' for if it does not, the Act can have no application to it. This question is, in a large measure answered by what I have already said. These words have their ordinary meaning in a context of wages and/or salary as Dixon J. pointed out above in Mutual Acceptance Co. Ltd. v. F.C. of T. It has not been suggested by counsel for the Commissioner and, indeed, could not, in my view, be suggested that the provision of the car could be classed as coming within the ordinary meaning of ``commission'' or ``bonus''. Both words plainly relate to money payments. (For the sake of completeness I mention that ``bonus'' was discussed in
Murdoch v. Commr of Pay-roll Tax (Vic.) (1980) 43 C.L.R. 629.) This then leaves the question whether it is an ``allowance''. Once again one may go to the decision in Mutual Acceptance Co. Ltd. v. F.C. of T. (supra) for an explanation of the meaning of the word ``allowances'' in the definition. Latham C.J. at pp. 396-397 said:

``When the word is used in connection with the relation of employer and employee it means in my opinion a grant of something additional to ordinary wages for the purpose of meeting some particular requirement connected with the service rendered by the employee or as compensation for unusual conditions of that service. Expense allowances, travelling allowances, and entertainment allowances are payments additional to ordinary wages made for the purpose of meeting certain requirements of a service.''

I have already set out the words which Rich and Dixon JJ. used in describing ``allowances'' and it is plain that they took the view that the proper and ordinary meaning of the word in the context of wages, is an agreed amount of money (paid or payable in cash or in kind) by the employer for some purpose directly related to the provision of services by the employee. The word ``allowance'' in the context we are concerned with does not merely mean something that is allowed or permitted by the employer. It means an allowance by the employer of a monetary amount (paid in cash or in kind) intended to be related or appropriated directly to a particular feature of the employment of the employee in the way in which Latham C.J. explained and it is not to be understood as merely a permission or allowance by the employer to use the employer's car or a swimming pool built on the premises or the like. If benefits of that nature are to be taxed, then special provisions as in sec. 3(1)(e) and (2) are required because they are not within the ordinary acceptance of what are ``allowances'' when one is considering ``allowances'' in relation to ``wages''. In
W.A. Flick & Co. Pty. Ltd. v. F.C. of T. (1959) 103 C.L.R. 334 the Court (Dixon C.J., McTiernan, Taylor, Menzies and Windeyer JJ.) applied Mutual Acceptance Co. Ltd. v. F.C. of T. (supra) to a similar case of payment by an employer to an employee of an amount of money for use of his, the employee's car, in the employer's business. Just as wages and salaries may, within the definition, be paid ``in cash or in kind'', so the definition permits commission, bonuses and allowances to be paid ``in cash or in kind'', so the definition permits commission, bonuses and allowances to be paid ``in cash or in kind'' but, as I have sought to make clear in the case of ``wages'' and ``salary'' in the definition, the words payment ``in cash or in kind'' do not alter the nature of what is a commission or a bonus or an allowance, namely, a specific monetary amount agreed to be passed on to the employee. Once it is seen that the expression ``paid or payable (... in cash or in kind)'' cannot convert the provision by the employer of a car for Mr Baxter's use into ``wages'' as defined by the Act or into an ``allowance'', there is no way in which the provision of the car for use by Mr Baxter can be brought into account for taxation under the Pay-roll Tax Act 1971.

Thus far I have considered the Act without reference to the amendment made to sec. 3(1) by the Pay-roll Tax (Amendment) Act 1988, Act No. 100, Sch. 4(3)(i). That Act inserted into the definitions in sec. 3(1) the word ``pay'' and it was defined as follows:

```pay' in relation to wages, salary, commission, bonuses or allowances includes provide, confer and assign.''

It was contended on behalf of the Commissioner that the amendment operated to make clear that the various components in the

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overall expression ``wages means...'' are not required to be considered as representing amounts of money and thus the word ``allowances'' would catch the case of use of a car made available by the employer to the employee. The word ``allowances'' it is said - like all the words before it - includes anything of a value whether certain or uncertain, that is allowed to or conferred upon, the employee by the employer. In my view the amendment does not bear that meaning. It does not alter the meaning of the words ``wages, salary, commission, bonuses or allowances paid...'' but merely enlarges the meaning of the word ``pay'' to cover circumstances in which what are ordinarily understood as ``wages, salary, commission, bonuses or allowances'' are made available to employees; they still remain wages, salary etc. as ordinarily understood in our community.

To give the words the meaning contended by the Commissioner would be to alter the whole nature of pay-roll tax. At present it is a tax payable upon wages, salaries, commission, bonuses and allowances and upon one further feature often found in the case of employer and employee, i.e. meals and quarters provided by an employer: it would become a tax upon wages paid to and benefits, monetary or otherwise, received by the employee. In other words it would introduce into the Pay-roll Tax Act the scheme behind the Commonwealth Fringe Benefits Tax Assessment Act 1986. Such a radical change, in my view, should not be held to result merely from the definition given to the word ``pay'' in the amending Act of 1988. If the Legislature proposes to tax benefits received by employees over and above wages paid there would need to be defined with some degree of precision, as in the Commonwealth Fringe Benefits Tax Assessment Act, the circumstances in which the tax is to operate beyond the concept of wages, salary etc. as ordinarily understood. In this regard one may note that the word ``pay'' as defined in the Act of 1988 in using the words ``provide, confer and assign'' is using words introduced into the Victorian Pay-roll Tax Act 1971 by amendments made by Act No. 9440 of 1980. A significant amendment was made by that Act to the definition of ``wages'' by adding after ``allowances'' the words ``or other benefits''. The Act required that the words ``wages, salary'' be read as ``wages, remuneration, salary''. In addition the principal Act was amended by inserting a new sec. 3A which made taxable ``a benefit received by an employee in respect of the terms of repayment of a loan provided by the employer to or in relation to the employee''. None of these extensions to the operation of the Act is to be found in the New South Wales Act, but the Commissioner none the less claims that Act in its present form is to be so understood. That the amendment is not to be given any such effect as the Commissioner claims finds support in the statements of the Minister made on the second reading of the Bill. He said (Legislative Council Parliamentary Debates, 7 Dec. 1988 p. 4493):

``To overcome a possible loophole in the definition of wages, the Bill includes an amendment to make it clear that payments by or to a third party as remuneration for services provided by an employee are subject to payroll tax. The amendments will make it clear that all indirect payments made in respect of an employee's services are subject to payroll tax.''

This was a direct reference to sec. 3(4). But there is not a hint anywhere in the Minister's speech that the concept of ``wages'' was being extended in the manner for which the Commissioner contends. A finding that the inclusion of the definition of the word ``pay'' in Act No. 100 of 1988 should be taken to extend the operation of the Act to include benefits not in cash, over and above wages, received by employees from employers would be tantamount to taxation by stealth and I decline so to interpret the legislation. The purpose of the amendment can just as readily be taken to have been intended to do no more than seek to provide a more effective net to cover various devices that may be used in making payments of what are, none the less, wages, salary, commission, bonuses or allowances as ordinarily understood. The conclusion to which I have come makes it unnecessary to consider upon what basis, if the Act did cover a benefit received by an employee, such as use of a car, the benefit could be taxed. From the point of view of the employer the provision of a car in circumstances such as the present, where the car will go on the lot for sale after the employee has used it, may occasion no out-going expense to the employer from such use at all. From the point of view of the employee, however, there

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has undoubtedly been a benefit of considerable monetary value provided. This very state of affairs points strongly to the need for legislative action to fix the basis of valuation of such a benefit for the purpose of taxation if it were, in fact, proposed to tax it, as had to be done in the case of meals and quarters.

In the result then the plaintiff succeeds and is entitled to the declaration sought.

I make a declaration in accordance with para. (1) of the summons.

The defendant is to pay the plaintiff's costs.

These orders may be entered.