On count 1 the applicant was charged with being an employer in circumstances where the Australian wages paid by him in an unspecified calendar month between 1 July 1993 and 30 June 1994 exceeded $47,083, he failed, within seven days after the close of that unspecified month, to apply to the Commissioner in a form approved by the Commissioner, for registration as an employer under the Act, contrary to s12(1) and s35(1)(a). For the offence under count 1 a fine of $8,000 was imposed.

On each of counts 4 to 14 and 17 to 22 the applicant was charged with breaching s13(1) and s35(1)(a), in that being a person who was required to apply for registration under s12(1) with respect to an unspecified calendar month between 1 July 1993 and 30 June 1994, he failed within seven days after the close of each of the seventeen months respectively from July 1994 to May 1995 and July 1995 to December 1995, to furnish to the Commissioner in a form approved by the Commissioner, a return relating to each of those respective months specifying therein any taxable wages that were paid or payable by him during that month. On counts 2 and 15 he was charged with breaching s13(3A) and s35(1)(a) by failing to furnish the annual returns required within seven days after the close of June 1994 and June 1995 respectively. On the 19 counts just referred to, that is to say, counts 4 to 14, 17 to 22 and 2 and 15, for his failure to furnish the seventeen monthly returns and the two annual returns a global fine of $27,500 was imposed.

On count 3 the applicant was charged with breaching s17 and s35(1)(a) (the reference should have been to par(d)), in that being an employer liable to pay pay-roll tax under the Act with respect to an unspecified calendar month between 1 July 1993 and 30 June 1994, he failed to pay the tax to the Commissioner within seven days after the close of that month, being the time within which he was required by s13 to lodge the return of wages in respect of which the tax was payable. On count 16 he was similarly charged, except in relation to an unspecified calendar month between 1 July 1994 and 30 June 1995. On count 3 he was fined $4,000 and on count 16 he was also fined $4,000.

The reason why the counts did not specify a month with particularity was as follows. All the prosecution knew was that in the financial year to June 1994 the applicant's Australian wages bill totalled $627,240, an average over that year of $52,270 each month. It was therefore possible that in each of the twelve months the applicant's Australian wages bill exceeded $47,083. It was also possible that the wages bills for eleven of the months were in amounts less than $47,083 and for the remaining month substantially greater than that sum. The prosecution accepted that all it could prove was that in at least one of those twelve months the wages bill must have exceeded $47,083, and the applicant must have incurred an obligation to apply for registration as an employer within seven days after the close of at least one month in that financial year, and he failed to so apply.

It might not, of course, have been until the month of June 1994 that the applicant's wages bill became so large as to impose upon him an obligation to apply for registration within seven days after the close of that month. If that was the case then the applicant's obligation under s13(1) to furnish monthly returns of his wages might not have commenced until July 1994. However, his obligation under s13(3A) to furnish an annual return must have commenced with June 1994, and so count 2 charged him with failing to furnish it. The charges for failing to comply with the obligation to furnish a monthly return therefore commenced (with count 4) with respect to July 1994. Such charges continued for each month thereafter (see counts 4 to 14, 17 to 22) until December 1995 with the exception of June 1995, in respect of which month there was charged a failure to lodge an annual return (count 15).

As with the financial year to June 1994, so too with the financial year to June 1995. Once again the prosecution could not assert the amount of the applicant's Australian wages bill in any month in the financial year to June 1995. However it was able to establish that the total Australian wages bill for the financial year was $651,965, an average of $54,330 each month. Unable to say whether an amount in excess of $47,083 was paid out each month or in any particular month, all the prosecution could prove was that in at least one month in that financial year the Australian wages bill must have exceeded that sum.

Pay-roll tax was payable with respect to any month in which the wages bill exceeded the sum of $47,083. (s7(2)). It followed that there must have been at least one month in the 1994 financial year and at least one month in the 1995 financial year in respect of which pay-roll tax was payable by the applicant. He did not however pay any pay-roll tax. As a result he was charged with counts 3 and 16 respectively for his failures to pay the tax with respect to an unknown month in each of the two calendar years.

There is no transcript or tape of most of the hearing before the magistrate. Counsel's notes have provided most of the information concerning what was said, and unfortunately it appears likely that the information I have been given is incomplete.

The prosecutor informed the learned magistrate that the matter first came to the attention of the Commissioner in mid 1995 upon him learning that the applicant was a sizeable employer and might be liable to pay pay-roll tax. Initial investigations involved two visits to the offices of the applicant's Melbourne accountant after which a preliminary determination was made that the applicant was liable to pay the tax. There was further contact with the applicant late in 1995, in the course of which he was advised that he might have a liability to pay pay-roll tax. He was sent a form of application to be registered as an employer under the Act and he was served with a notice to produce information pursuant to the provisions of s16. He claimed to have difficulties producing documentation at that time, although some documents were produced. On 20 December 1995 he was served with final notice that proceedings would be commenced for offences unless within seven days he complied with the requirement to produce information. There was no such compliance and hence on 9 January 1996 the complaint was made and the proceedings commenced. It was not until 24 July 1996 that the applicant applied to the Commissioner to be registered as an employer. In the application he identified his business as logging and timber milling at Lilydale and stated that he had fifty five employees. Eventually he was registered as an employer under the Act.

It appears that the Commissioner proceeded to assess the applicant's liability to pay pay-roll tax pursuant to the powers to do so in s18(2). That sub-section entitled the Commissioner to cause an assessment to be made in cases where inter alia an employer failed or neglected to furnish a return as required by the Act or where the Commissioner had reason to believe or suspect that an employer was liable to pay pay-roll tax (notwithstanding that that employer may not have furnished any return). In the event of such an assessment being made, s18(2) provided that the employer became liable to pay the assessed pay-roll tax, except in so far as he established on objection or appeal that the assessment was excessive. The learned magistrate was told that on 9 August 1996 the Commissioner issued to the applicant a formal notice of assessment of his pay-roll tax liability for the financial years to June 1994 and 1995 in the total sum of $20,888.70. His Worship was not provided with an explanation as to how that figure was calculated except that he was told that it included a twenty per cent penalty tax. With the consent of both parties I was provided with details of the calculations as follows:

It was not explained to me why the tax was calculated on an annual basis, rather than for each month. It may be that the explanation is to be found in what was later said to me by counsel for the respondent, which was that the Commissioner's administrative practice was that if the wages in a particular month totalled less than the threshold for registration, the amount by which it did so was offset against the amount by which the threshold was exceeded in another month, presumably one in the same financial year.

It can be seen therefore that the Commissioner assessed that pay-roll tax was payable for the two financial years in the total sum of $17,407.25 and a 20 per cent additional tax on that in the sum of $3,481.45 was also sought, it being referred to as a penalty tax. The Commissioner was entitled to seek the additional tax by virtue of s22(1) which provided that if any tax payable under the Act was not paid before the expiration of the time within or by which the tax was payable, or such further time as might be allowed by the Commissioner, additional tax was payable at the rate of 20 per cent upon the amount of the pay-roll tax payable. By subs(2), the Commissioner had the power, in his absolute discretion, to remit the additional tax or any part thereof.

The learned magistrate was informed that despite at least two extensions granted on request, and warnings from the Commissioner, the assessed tax remained unpaid. The court had no power to order payment of it and instructions had been given to the Director of Public Prosecutions to commence proceedings to recover it. The learned magistrate was also told with respect to counts 3 and 16, that the amount actually not paid was not known. The information before me provided no further explanation about that.

The following summary of the submissions of counsel for the applicant to the learned magistrate comes from the note made by counsel for the respondent. The magistrate was told that the applicant was a sixty three year old self-made man, who started as a sawmiller. In 1992 he entered an export market sending six shipments. He made a large capital upgrading of sawmills. In 1990 he had twenty employees and in 1993 the number was in the mid-fifties. Counsel told the magistrate that the applicant was ignorant of his pay-roll tax obligations. His workforce grew. His financial affairs were in the hands of an accountant called Bradshaw. (There appears no doubt that Bradshaw was based in Melbourne.) He directed the Commissioner to that accountant. The accountant maintained that primary production was involved and therefore there was no liability to pay the tax. It was not until early 1996 that counsel for the applicant advised the accountant that he could not see that a business involved in primary production was excepted from liability to pay the tax. Counsel said that documentation was then provided and the Commissioner's assessment was made. Therefore, counsel said, the applicant was in his position because he had received bad advice. Counsel also said that it had been thought that a dozen or so men were not employees but independent contractors, until counsel had advised that was incorrect and that they were employees in the common law sense.

Counsel for the applicant also told the learned magistrate that he had been informed by counsel for the respondent that as a matter of practice the Commissioner accepted annual returns instead of monthly returns. It was submitted that that was a mitigating factor so far as concerned counts 4 to 14 and 17 to 22. It was submitted that it might be appropriate for one sentence to be imposed on the whole complaint. Counsel suggested that the main offences were the failure to register, the failure to lodge the annual returns and the failure to pay the tax.

Concerning the then current failure to pay the tax, the learned magistrate was told that the applicant had been in a predicament since 1995. He had a pile of woodchips, which had cost $l,500,000 to produce, sitting on a wharf. He had creditors for a total of over $l,000,000. Since the middle of 1996 his business had ground to a halt. He had been granted an extension of time in which to pay the tax until a time to which it was expected some form of federal licence would be extended. That did not occur. A second extension of time was granted to enable him to sell plant, but monies had not been forthcoming from that source. Counsel said that payment would be made in the following three months and he argued that any loss of revenue would be offset by the fact that when payment was made there would also be payment of the twenty per cent additional tax.

In reply to the plea in mitigation, counsel for the respondent submitted that the time when the unpaid tax was in fact paid was only relevant to a point, as the offences had already occurred. He also submitted that the applicant's then current financial difficulties were only relevant to a degree, as at the end of the 1994/95 financial year he had earned $4,500,000 and the pay-roll tax could have been paid then.

The following comes from a transcript of the comments on passing sentence of the learned magistrate:

"The defendant has pleaded Guilty to 22 offences under the Pay Roll Tax Act of 1971 which stem from him coming to notice as a substantial employer which revealed that he was a person liable to register for payroll tax purposes and for the subsequent furnishing of returns and to be assessed as a payer of pay roll tax. The offences include two counts of non payment of payroll tax which total in excess of $20,000 which at this stage remain unpaid. In the years since he's come under notice his wages bill was something in excess of $600,000, and whereas the threshold for the registration for payroll tax purposes was a mere $47,083. The key to the effectiveness of the legislation of pay roll tax is the voluntary registration and the furnishing of returns which allows for the assessment and the liability to be effected and its apparent that at the time of the detection the defendant was running a substantially commercial enterprise and the amount of pay roll tax uncollected will never be known. Although the defendant used Victorian accountants who it seems did not apprise him of his pay roll tax obligations, the use of such account(ant)s was his own choice. Nevertheless, as a business person in this State and as a man without a lack of intellectual resources, he by craft and energy built up an enterprise over thirty years, he could hardly have failed to have encountered reference to pay roll tax obligations of employers and he had no justification for not making effective enquiries in respect of his pay roll tax responsibilities. Given the maximum penalties applicable for each offence set by Parliament at $10,000, it (is) a clear indication that these offences are to be viewed as serious offences. I have taken in to account what the defendant's counsel has put on his behalf, his personal circumstances, and that he has no relevant prior offences and I take into consideration the circumstances of these offences, but in all the circumstances I need to impose a penalty which will deter the offender and others from committing these kind of offences.

For the offence of failing to register, although perhaps not the most serious sort of offence one could envisage, nevertheless it is a very serious offence and calls for a penalty near the maximum and he will be fined $8,000.

For each offence of failing to pay pay roll tax he will be fined $4,000 and for the remaining 19 charges of failing to furnish a return on those collectively he will be fined $27,500. That's a total of $53,500."

The grounds of the motion to review, as amended, are as follows:

"1 The fines imposed by the learned Magistrate, individually and in their totality, were manifestly excessive in all the circumstances of the case;

2 In sentencing the Applicant on the 17 counts in the complaint alleging offences contrary to sections 13(1) and 35(1)(a) of the said Act the learned Magistrate failed to place or (sic) any adequate weight, on the fact that the Commissioner, during the relevant periods, did not require compliance with the obligation on employers under the said sections to file a monthly return of wages and pay tax on a monthly basis.

3 The learned Magistrate erred in law and in fact in approaching the culpability and seriousness of the Applicant's conduct from the footing that the Applicant's annual payroll was in excess of $600,000.00 when the threshold for the registration and payment of payroll tax was $47,083.00;

4 The learned Magistrate erred in law and in fact in finding that the Applicant had failed to make effective enquiries in respect of his payroll tax responsibilities."

Grounds 2 and 4 have not been made out. As to ground 2, the scheme of the Act is for the furnishing of monthly returns and if it is due, for the payment of tax each month. The information provided to me does not reveal that the learned magistrate was informed that the Commissioner did not require compliance with the obligation of employers to pay the tax on a monthly basis. All it reveals is that his Worship was informed by counsel for the applicant that according to what he had been told by counsel for the respondent, as a matter of practice the Commissioner accepted annual returns instead of monthly returns. It was submitted to the learned magistrate by the applicant's counsel that was a mitigating factor with regard to counts 4 to 14, 17 to 22. The learned magistrate said that he took into account what the applicant's counsel had put on his behalf. It is impossible to test whether the learned magistrate failed to place adequate weight on what he was told, except perhaps in the course of a consideration of whether the fines were manifestly excessive, which is what is asserted in ground 1 of the motion. As to ground 4, on the applicant's version of the events he did not make effective enquiries, that is to say enquiries which resulted in him being informed of his pay-roll tax responsibilities. He can hardly complain that the learned magistrate accepted his explanation.

Ground 3 has been established. The learned magistrate erred when he stated that in the years since the applicant had come under notice his wages bill was something in excess of $600,000 whereas the threshold for registration for pay-roll tax purposes was a mere $47,083. The figure in excess of $600,000 was an annual one, whereas the threshold figure of $47,083 was a monthly one. The learned magistrate would have been correct if he had instead said that in the years since the applicant had come under notice his wages bill was something in excess of $600,000 which revealed average monthly wages in excess of $50,000, whereas the threshold for registration for pay-roll tax purposes was $47,083 in a month. By saying what he did, it appears that the learned magistrate sentenced upon the incorrect basis that the applicant's wages bills were over twelve times the threshold figure at which registration, monthly and annual returns and payment of pay-roll tax were required. The truth of the matter was that for the years to June 1994 and June 1995 his annual wages bills exceeded what might arguably be regarded as the annual threshold figure by as little as eleven per cent and fifteen per cent respectively, and not by well over one thousand per cent as the learned magistrate's comments suggests. His Worship described the applicant's failure to register as a very serious offence. If he had not made the error he in fact made he may not have expressed himself in that way and may not have sentenced on that basis. Prima facie it appears that the applicant's offences which concerned failures to register and lodge forms, were regarded as more serious than they actually were. For that reason the fines imposed for all counts except 3 and 16 will be set aside and sentence will be reimposed by me. I turn to consider what it should be and whether the fines of $4,000 imposed on each of counts 3 and 16 were manifestly excessive.

Counsel for the applicant submitted that the amounts of the additional tax which the Commissioner required the applicant to pay ought to have been regarded as a starting point when considering the appropriate penalty. When referring to what the Commissioner required the applicant to pay, counsel for the applicant meant the sum of $1,452.27 additional tax assessed for the year to June 1994 and the sum of $2,029.18 additional tax assessed for the year to June 1995. In support of his proposition counsel relied on the principle established by such cases as McMillan v Bierwirth (1988) 49 SASR 403, Ambrose v Sandford Pty Ltd [1989] NTSC 30; (1989) 42 A Crim R 324, Bulyee Nominees Pty Ltd v O'Brien 35/1997 and Taylor v Lanning 55/1997. Clearly the principle established by those cases may be extended to the circumstances of this case but not, however, by reference to the additional taxes totalling $3,481.45 which became payable by the applicant by virtue of the provisions of s22(1). For the purpose of dealing with the submission it is necessary to refer to the scheme of the Act.

The Commissioner did not impose the additional tax under s22(1). It became payable as a matter of law under that sub-section, although by subs(2) the Commissioner had a discretionary power to remit it. If the Commissioner did not exercise that power in favour of the applicant, which is the case here, the additional tax remained payable by the applicant, notwithstanding the laying of the charges against him and the imposition of penalties by way of fines under s35.

The flat twenty per cent additional tax payable under s22(1) was only one form of additional tax payable under the Act. Two other forms were provided, one by s18(4) and the other by s36(1). Section 18(4) provided that if an employer became liable to pay pay-roll tax by virtue of an assessment under s18(2), the employer was also liable to pay, by way of additional tax, double the amount of that pay-roll tax, but the Commissioner might, in any particular case, for any reason which he in his absolute discretion thought sufficient, remit the additional tax or any part of it. Section 36(1)(a) provided that an employer who neglected to furnish a return as and when required by the Act was liable to pay additional tax at the rate of twenty per cent per annum upon the amount of pay-roll tax payable by the employer. That percentage was to be calculated for the period commencing on the last day allowed for furnishing the relevant return and ending on the day upon which the return was furnished or the day upon which the assessment was made under s18, whichever occurred first. By subs(2) the Commissioner had a discretionary power to remit that additional tax. However, important in the context of this case were the provisions of subs(3), by virtue of which the additional tax otherwise payable under subs(1) could not be charged if the Commissioner considered, as he did here, that the circumstances of the case warranted action being taken to recover the penalty under s35, that is to say, the prescribed fine. The principle established by the cases referred to earlier could only be applied in this case by having regard to the additional tax which the applicant was once liable to pay because of the provisions of s36(1)(a), but is no longer liable to pay because the Commissioner decided to bring these charges against him. That additional tax would, but for the laying of the charges, only have become payable because of his neglect to furnish returns, monthly or annual, and not because of his neglect to apply for registration nor because of his neglect to pay pay-roll tax. It could therefore only amount to a starting point for a consideration of the penalty for counts 4 to 14, 17 to 22 and 2 and 15 and not for counts l, 3 and 16.

However, that it could amount to such a starting point creates a problem, for the dollar amount of that starting point is impossible to calculate. The learned magistrate did not have sufficient information upon which the additional tax under s36(1)(a) could be calculated. The probable reason for that was the failure of the applicant to comply with the law requiring the furnishing of monthly returns. Doing the best I mathematically can, on the sparse information available, my estimate is that the additional tax, which would have been payable by the applicant under s36(1)(a), if the Commissioner had determined not to recover the penalties under s35, may well have been somewhere between about $5,000 and $8,500.

Counsel for the applicant also submitted with regard to counts 4 to 14 and 17 to 22 that the offences should be regarded as technical ones only, because it was not the practice of the Commissioner to require monthly returns to be furnished, notwithstanding that the legislation required them. Apparently the Commissioner was content to accept annual returns only. How an employer could gain the approval of the Commissioner to furnish only annual returns is not clear on the information before me. Further there was no explanation concerning the practice of the Commissioner in assessing the pay-roll tax itself. The law provided that it was payable monthly and not yearly. It could only be appropriately paid each month if it was paid in conjunction with monthly returns. A factor counting against the submission that the Commissioner's practice regarding monthly returns should have been taken into account as a mitigatory factor, is that the offences for failing to furnish those returns were nevertheless committed by the applicant in breach of the statute and they were not committed because of some misplaced reliance on the Commissioner's practice. Nevertheless, if it was not the practice of the Commissioner to require monthly returns, it would be unjust to impose upon the applicant a substantial penalty for failing to furnish them, when as a matter of practice the requirement for monthly returns was not enforced against other employers. There is plainly sound reason for determining that the penalties appropriate for failing to furnish the annual returns should be greater than those for failing to furnish the monthly returns.

Many of the matters stated in mitigation were unchallenged by prosecuting counsel and were accepted by the learned magistrate. It followed that this was not a case where the offender ought to have been sentenced for deliberately offending. His offences all stemmed from one set of circumstances. From 1990 to 1993 his business expanded, along with the number of his employees, thereby resulting in the provisions of the Act commencing to apply to him. He did not realise that he had become subject to obligations under the Act. Even after the Commissioner suggested that he might have such obligations his Victorian accountant maintained that he did not. So lack of appropriate professional advice was a cause of the commission of the offences which was then compounded by bad professional advice. He was a sixty three year old self-made man with no relevant prior offences and may not have had a pay-roll tax liability prior to this. Although it was certainly his responsibility to ascertain and comply with his obligations under the law, it is plain that this was not a particularly serious case. If he had offended deliberately, it would have been. I reject the submission by counsel for the respondent that the learned magistrate was entitled to view with scepticism the applicant's claim of ignorance about his obligations. His Worship was not entitled to so regard it, without at least giving the applicant notice of the scepticism and an opportunity to call evidence to establish his version of the facts.

The applicant's counsel also submitted that a factor in mitigation was that the applicant pleaded guilty. He argued to me that the case would have been a particularly difficult one to prosecute and the pleas therefore saved the authorities a lot of trouble. No such submission was made to the magistrate, according to the material before me, and it is impossible to test its validity. I also note that the pleas were not made at an early stage of proceedings, but only after a number of adjournments. Nevertheless some credit for the pleas of guilty ought to have been given.

The penalties imposed ought to have born some relationship to the amount of tax outstanding and the period of time over which it was outstanding. Taylor v Lanning (supra) at 2. The basal amount of tax involved here was a total of $17,407.25. Some of it was outstanding from as long ago as an unknown date in the year leading to July 1994. None of it had been paid at the time the penalties were imposed on 31 January 1997. All of it had therefore been outstanding for a significant period of time.

Deterrence, particularly general deterrence, was an important factor with regard to the size of the penalty. McMillan v Bierwirth (supra) at 419; Ambrose v Sandford Pty Ltd (supra) at 339.

The totality principle should be taken into account. The amount of tax which was avoided is a particularly material consideration, but care must be taken where there are twenty two counts, nineteen of which concern consecutive monthly failures to furnish returns, not to impose penalties which in total are manifestly excessive, even though the individual penalties might be appropriate when viewed alone.

As to count 1, the learned magistrate was correct when he stated that the effectiveness of the legislation largely depends on voluntary registration and furnishing of returns. It was the failure of the applicant to register as an employer which lead to difficulty in detecting his offences and his liability to pay tax. However I regard the fine of $8,000 for failing to register with respect to an unknown month in the year leading to 30 June 1994 as manifestly excessive. The maximum fine which could have been imposed was $10,000. It was the first offence committed by the applicant under the Act. He had no relevant prior offences. He did not deliberately commit this offence. I will therefore set aside the penalty which was imposed and instead impose a fine of $3,000 for count 1.

With respect to counts 4 to 14 and 17 to 22, being seventeen failures to furnish monthly returns, I again note that the offences were not committed deliberately and I particularly have regard to the fact that it was not the practice of the Commissioner to insist on monthly returns. I will not repeat what I said about that. It seems to me that one fine of $3,400 for all of those counts would be appropriate, and it will be imposed.

Counts 2 and 15 concerned the failure to lodge annual returns. Once again the offences were not deliberate but in determining the appropriate penalty I have particularly had regard to the statutory penalty otherwise due under s36(1)(a), which was forsaken by the Commissioner when he determined to recover the penalty under s35. I did not take that into account when determining the appropriate penalties for counts 4 to 14 and 17 to 22. On count 2 the applicant is fined $5,000 and on count 15 the applicant is also fined $5,000.

Counts 3 and 16 concerned the failure of the applicant to pay the tax. In determining what would have been the appropriate penalties for them I particularly have regard to the amount of tax which was not paid. I respectfully agree with the penalties which were imposed by the learned magistrate, that is to say a fine of $4,000 for count 3 and $4,000 for count 16. Accordingly the fines which were imposed by his Worship for counts 3 and 16 will be allowed to stand.

As a result of my disposition of the motion to review the total payable by the applicant by way of fines will be $24,400. In addition he became liable to pay the twenty per cent additional tax under s22(1), in the sum of $3,481.45. Those two amounts were payable in addition to the pay-roll tax totalling $17,407.25 which he failed to pay. Overall the total of the fines is in my view a reasonable one, having particular regard to the need to impose a penalty of general deterrence but at the same time acknowledging the fact, for sentencing purposes, that the offences were not committed deliberately.