Commissioner of State Revenue Victoria v Gas Ban Pty Ltd

Commissioner of State Revenue Victoria v Gas Ban Pty Ltd - [2011] VSCA 89 - VSCA 2011 case summary — Zoe

[21]

[I] will be lodging a formal Notice of Objection, in the meantime, I would like all legal action to pursue the apparent payroll tax debt withheld, as it is clear that there are some serious mistakes which have occurred in respect of this employer and that the debt is not correct.

...

The SRO's figures as assessed wages are:-

04/05 (but only from 1/5/05 - 30/06/05) $ 181, 458

05/06 $1,302,929

1/7/06 - 31/12/06 $ 788,168

1/1/07- 30/6/07 $ 755,347

In an email dated 10 Dec 07 to Ms Burraston, the SRO was provided with copies of the employers relevant P & Ls

In another email on 20/12 sent to M/s Burraston, she was advised the total wages of the employer for the full financial years in question were:-

1. 04/05 $265, 859

2. 05/06 $541, 055.23

3. 06/07 $ 859, 887

It needs to be stated that in the 04/05 year there were payments to consultants and commissions which I have not had an opportunity to determine, and IF these payments were taxable (which is not known at this stage) the total remuneration for 04/05 would have been $568,729.

For the 05/06 year if the payments to consultants and commissions were all taxable (which is not known) the total would have been $788, 766.

For the 06/07 year if the payments to consultants were all taxable (which is unknown) the total would have been $989,098.

So, even on a worse case scenario, the SRO figures, the basis of their assessment are simply not correct, and flawed.

...

Whilst the 60 day period for lodgment of an Objection has lapsed, clearly the taxpayer's emails of Dec 07 were within the 60 day period, and were an endeavour to dispute the assessment! Thus, can this fax be ALSO treated as a request to lodge an Objection outside the 60 day period.

Whilst I will attempt to lodge this objection as soon as possible, I need to firstly clarify the status of the payments to consultants and commissions.

In the meantime, given the SRO has clearly acted on incorrect information, can all endeavours to take legal action to recover the amounts initially assessed cease.

[52]

We refer to your letter dated 19 February 2009 and note your request for the provision of invoices of payments made out to the relevant persons and/or entities which are the subject of the exemption sought. Our client is currently collating this information and anticipates being able to provide it shortly.

Our client maintains and continues to maintain that the objections lodged on its behalf remain valid and subsisting objections notwithstanding the position adopted by your office. Alternatively, ..., the Commissioner, acting reasonably, should have duly granted our client an extension of time in which to lodge objections.

We further reiterate that our client remains ready and willing to remit any amounts properly owing, but remains of the view that the amounts assessed by the Commissioner in the subject assessments were wrong, and excessive.

To avoid the necessity of Court proceedings, and to avoid the escalation of costs for both parities, we are instructed to resolve the matter on the following basis:

(1) Subject to the condition stated in (2) below, my client shall immediately tender to the Commissioner - but under protest - the sum of $52,021.21 (being the amount outstanding under the alleged debt, and calculated as the difference between the amount set forth in the statutory demand and the mount previously tendered by our client on 19 December 2008).

(2) Our client shall make the payment referred to in paragraph (1) if, and only if, the Commissioner grants our client an extension of time in which to lodge fresh objections against both: (i) the assessments dated

30 October 2007; and (ii) the assessments dated 11 September 2008, where the period of such extension shall be 60 days from the date of consent orders in the Supreme Court proceeding (refer below), and where the Commissioner grants such an extension without prejudice to the status of the objections already lodged on behalf of our client.

(3) That the parties consent to the following orders to be made by the Court in this proceeding:

(i) The statutory demand issued by the defendant and dated 10 December 2008 be set aside;

(ii) Each party bear their own costs of the proceeding;

(iii) The proceeding otherwise be dismissed.

Kindly provide your response on 4.00 pm Thursday 5 March 2009.

Please also note that we reserve the right to produce, and we intend to rely on this letter on the question of costs...Please note that this is an open letter.

[106]

Something should be added respecting the additional alternative ground found in para (b) of s 459J(1) of the Corporations Act. That was that the statutory demands were to be set aside because the Court of Appeal and the primary judge were 'satisfied' that, although there were no defects in the demands, there was 'some other reason' to set them aside.

It first should be observed that the hypothesis in the present appeals must be, in accordance with what has been said above, that there is no 'genuine dispute' within the meaning of s 459H(1). Both the primary judge and the Court of Appeal emphasised the importance of the disruption to the taxpayers, their other creditors and contributories that would ensue from a winding up, together with the absence of any suggestion that the revenue would suffer actual prejudice if the Commissioner were left to other remedies to recover the tax debts. But these considerations are ordinary incidents of reliance by the Commissioner upon the statutory demand system.

Keane JA, expressing disapproval of what had been said to the opposite effect by Olney J in Kalis Nominees Pty Ltd v Deputy Commissioner of Taxation,[23] held that the scope of the discretion conferred by para (b) of s 459J(1) should be determined by the subject matter and purposes of the Corporations Act, to the exclusion of 'the tax law'.[24] But, as remarked earlier in these reasons, Pt 5.4 contemplates that the 'debts' in respect of which statutory demands may issue will include 'tax debts' in the sense given to that expression in these reasons. The 'material considerations'[25] which are to be taken into account, on an application to set aside a statutory demand, when determining the existence of the necessary satisfaction for para (b) of s 459J(1) must include the legislative policy, manifested in s 14ZZM and s 14ZZR of the Administration Act, respecting the recovery of tax debts notwithstanding the pendency of Pt IVC proceedings.

The result is that the exercise of discretion by the primary judge under s 459J(1)(b) miscarried, and the Court of Appeal erred in upholding and supplementing it. Against the possibility of this Court so concluding, the respondents submitted that the matter should be remitted to the Supreme Court for re-exercise of the discretion under that provision. However, no fresh ground upon which the respondents might then succeed was suggested beyond reference to the time which has elapsed and the progression of the Pt IVC proceedings towards determination. But such a consideration, if it were supported by evidence of the state of progression of the Pt IVC proceedings, would be relevant in the operation of Pt 5.4 of the Corporations Act, if at all, at the later stage of the hearing of any winding up application. There should be no re-exercise of the discretion conferred by s 459J(1)(b).

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