Bridges win boosts parent’s profits
Tower Group spin-off Australian Wealth Management (AWM) has dramatically lifted its profit forecast following news that the NSW Government would not appeal a decision to excuse the fund manager’s dealer group, Bridges Financial Services, from a multi-million dollar payroll tax debt.
The NSW Government’s Office of State Revenue (OSR) had until September 21 to appeal the case, which it lost in the NSW Supreme Court in August, but decided against pursuing further legal action to recover more than $3 million in unpaid payroll tax it claimed it was owed by Bridges.
Following news of the decision, AWM upgraded its profit forecast for the full financial year by $1.8 million to $5.8 million, signalling in a statement that the reprieve would also allow it to bring forward “several strategic initiatives, previously planned for 2006”.
The news will come as a huge relief for Bridges, which stood to be hit with a bill of $3.177 million if the case had gone against it.
The decision is also good news for other dealer groups, which could have faced similar claims if the NSW Office of State Revenue had won the case against Bridges.
The NSW OSR argued that Bridges planners were either direct employees of the dealer group or relevant contractors — both of which carry payroll tax implications.
Legal experts had warned if the court ruled against Bridges, it could have opened the door for other financial planning groups to be hit with similar claims.
A spokesperson for the NSW OSR said it had “accepted the decision of the court in this matter”.
Clearly relieved, Bridges chief executive Alex Hutchison said: “We are pleased that the NSW OSR has decided not to appeal Justice Gzell’s decision. This result shows that the structure Bridges has operated under for 20 years is tried, tested and true. We look forward to being able to get back to the job at hand without any distractions.”
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