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Decision Impact Statement

Deputy Commissioner of Taxation v. Meredith


Court Citation(s):
[2007] NSWSCA 354
2007 ATC 5353
69 ATR 876
(2007) 245 ALR 150
(2007) 229 FLR 243

Venue: Supreme Court
Venue Reference No: CA 40251 of 2007
Judge Name: Giles JA, Ipp JA, Basten JA
Judgment date: 10 December 2007
Appeals on foot:
No

Impacted advice

Relevant Rulings/Determinations:

  • None
  • Subject References:
    EVIDENCE
    presumption of delivery in course of post
    relationship of Evidence Act 1995 (Cth) to other Acts
    Evidence Act 1995 (Cth), ss 160 and 163
    NOTICE
    service by post
    letter from Commonwealth agency
    evidence of non-delivery or non-receipt
    Acts Interpretation Act 1901 (Cth) s 29
    Income Tax Assessment Act 1936 (Cth) s 222AOF
    Evidence Act 1995 (Cth) ss 160 and 163
    TAXATION
    liability for failure to remit tax withheld from salary entitlements
    Income Tax Assessment Act 1936 (Cth) s 222AOE
    "contrary intention" in statute
    "give", "serve", "send" a notice
    "sending it by post"

    Exclamation This document is not a public ruling, but provides a statement of the Commissioner's position in relation to the decision and how the law will be administered as a consequence of the decision. Any proposals for changes in the law are matters for government and it is not appropriate for the Commissioner to comment.


    Précis

    Outlines the Tax Office's response to this case which concerned whether the giving of a Director Penalty Notice (DPN) by post under s222AOF of the Income Tax Assessment Act 1936 (Cth) could be rebutted by evidence of non-receipt or non-delivery.

    Decision Outcome

    Favourable

    Brief summary of facts

    1. A company of which the taxpayer was a director withheld amounts on account of tax from the salary entitlements of its employees, but failed to remit those amounts to the Commissioner of Taxation ("the Commissioner"). Upon the company failing to make such payments, the taxpayer, as a director, became automatically liable to a penalty equal to the amount which the company had failed to remit: s 222AOC of the Income Tax Assessment Act 1936 (Cth) ('ITAA 36')

    2. On 27 July 2004, the Commissioner gave notice by way of director penalty notice ("DPN") to the taxpayer of her liability and setting out ways in which it might be remitted. The Commissioner was required to take this step at least 14 days before commencing proceedings to recover the amount of the penalty: s222AOE of the ITAA 36. By way of defence, the taxpayer stated that she had not received the notice and was therefore not liable.

    3. At the hearing of the matter in the District Court of NSW, it was accepted by the Deputy Commissioner that the defence could succeed (if at all) only on the basis that the taxpayer proved non-delivery of the notice. In a judgment delivered on 27 October 2006, Quirk DCJ of the District Court found on the balance of probabilities that the DPN had not been delivered and dismissed the Commissioner's claim. The Deputy Commissioner appealed to the NSW Court of Appeal.

    Issues decided by the court or tribunal

    The New South Wales Court of Appeal decision:

    In a judgment delivered on 10 December 2007, the NSW Court of Appeal, by majority (Basten JA with whom Ipp JA agreed, Giles J dissenting), held as follows:

    1.
     Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery.
    2.
     Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act . If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post.
    3.
     As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case.

    Tax Office view of Decision

    Before the Court of Appeal's decision in the Meredith matter, the Commissioner accepted that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post was 'given' to the intended recipient at the time the DPN would have been delivered in the ordinary course of post and that the director had 14 days after the day of delivery in the ordinary course of post to cause the company to comply with s222AOB and achieve remission of the penalties.

    The Commissioner now accepts the decision of the Court of Appeal that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post will be 'given' to the intended recipient at the time the DPN is posted.

    Administrative Treatment

    Implications on current Public Rulings & Determinations

    The decision is limited to the giving of a s222AOE or s222APE DPN pursuant to s222AOF. Section 222AOF prescribes a method for giving such a DPN to a director who is registered with the ASIC as a current director.

    In the case of DPNs given by the Commissioner pursuant to s222AOF, the Commissioner will calculate the time for compliance with the DPN from the date on which the DPN was posted, irrespective of whether or when the DPN was received or delivered. Accordingly, where compliance with the DPN does not occur within 14 days after the DPN is posted to the current director, the Commissioner will regard the relevant s222AOC or s222APC penalties as being recoverable from that director.

    Implications on Law Administration Practice Statements

    None

    Your comments

    We invite you to advise us if you feel this decision has consequences we have not identified, or if a precedential decision such as a Public Ruling or an ATO ID requires reconsideration or amendment. Please forward your comments to the contact officer by the due date.

    Date Issued: 9 May 2008
    Due Date: 4 July 2008
    Contact officer: Grahame Tanna
    Email address: grahame.tanna@ato.gov.au
    Telephone: (02) 9374 2674
    Facsimile: (02) 9374 2002
    Address: Australian Taxation Office
    GPO Box 9990
    Sydney NSW 2000

    Legislative References:
    Acts Interpretation Act 1901 (Cth)
    2
    28A
    29
    40

    Acts Interpretation Act 1956 (Qld)
    13
    39

    Corporations Law
    109Y

    Civil Procedure Act 2005 (NSW)
    100

    District Court Act 1973 (NSW)
    127

    Evidence Act 1995 (Cth)
    4
    5
    160
    163
    182

    Income Tax Assessment Act 1936 (Cth)
    222ANA
    222AOC
    222AOE
    222AOF
    Division 9 Pt 6

    Income Assessment Act 1997 (Cth)
    950-100

    Insolvency (Tax Priorities) Legislation Amendment Act 1993 (Cth)
    16

    Interpretation Act 1987 (NSW)
    76

    Hire-Purchase Act 1959 (Qld)
    42

    Justices Act 1886 (Qld)
    56

    Local Government Act 1919 (NSW)
    628

    Local Government Act 1993 (NSW)
    710

    Migration Act 1958 (Cth)
    494A
    494B

    Supreme Court Act 1970 (NSW)
    75A

    Supreme Court Rules 1970 (NSW)
    Pt 51 r 4

    Case References:
    Alexander v. Stocks & Holdings (Sales) Pty Ltd
    [1975] VR 843

    Buresti v. Beveridge
    [1998] 1136 FCA
    (1998) 88 FCR 399

    Cheong v. Webster
    (1986) 20 A Crim R 107

    Cousins v. Gosford Shire Council
    (1970) 92 WN(NSW) 263

    Deputy Commissioner of Taxation v. Coco
    [2003] QSC 119
    52 ATR 700

    Deputy Commissioner of Taxation v. Dick
    [2007] NSWCA 190
    2007 ATC 4816
    67 ATR 762

    Deputy Commissioner of Taxation v. George
    (2002) 55 NSWLR 511
    2002 ATC 4930
    51 ATR 130

    Deputy Commissioner of Taxation v. Gruber
    (1998) 43 NSWLR 271
    98 ATC 4317
    38 ATR 434

    Deputy Commissioner of Taxation v. Mutton
    (1988) 12 NSWLR 104
    88 ATC 4153
    19 ATR 890

    Deputy Commissioner of Taxation v. Nercessian
    (2006) 67 NSWLR 215
    2006 ATC 4693
    64 ATR 360

    Deputy Commissioner of Taxation v. Saunig
    (2002) 55 NSWLR 722
    2002 ATC 5135
    51 ATR 435

    Deputy Commissioner of Taxation v. Taylor
    [1983] 2 NSWLR 139
    83 ATC 4539
    14 ATR 567

    Deputy Commissioner of Taxation v. Trio Site Services Pty Ltd
    [2007] FCA 776

    Deputy Commissioner of Taxation v. Woodhams
    (2000) 199 CLR 370
    2000 ATC 4141
    43 ATR 757

    Deputy Commissioner of Taxation (Cth) v. Woodhams
    (1998) 148 FLR 230
    99 ATC 4062
    41 ATR 204

    Fancourt v. Mercantile Credits Ltd
    (1983) 154 CLR 87

    Forsyth v. Deputy Commissioner of Taxation
    (2004) 62 NSWLR 132
    2005 ATC 4025
    58 ATR 179

    In re 88 Berkeley Road, NW9; Rickwood v. Turnsek
    [1971] Ch 648
    [1971] All ER 254

    Kyogle Shire Council v. Muli Muli Local Aboriginal Land Council
    (2005) 62 NSWLR 361

    McCallum v. Purvis
    [1906] VLR 578

    McClelland v. Amcil Industries Pty Ltd
    [1983] 1 NSWLR 615

    Murphy v. Teakbridge
    [1999] NSWSC 1231

    R v. Westminster Unions Assessment Committee
    [1917] 1 KB 832

    Repatriation Commission v. Gordon
    (1991) 100 ALR 255

    Scope Data Systems Pty Ltd v. Goman
    [2007] NSWSC 278

    Skalkos v. T & S Recoveries Pty Ltd
    [2004] FCAFC 321
    (2004) 141 FCR 107

    Other References
    Pearce and Geddes, Statutory Interpretation in Australia (6th ed, 2006) at [6.1]

     


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