Deputy Commissioner of Taxation v Todisco [2004] VSC 93

Supreme Court of Victoria|2004-03-26|Before: Balmford J

Income tax - assessment - evidence - notice of assessment - Taxation Administration Act 1953 (Cth) ss 8AAZJ, 255-45.

This is an appeal by the defendant by way of rehearing de novo under Rule 77.05 of the Supreme Court (General Civil Procedure) Rules 1996 ("the Rules") against an order of Master Wheeler made on 26 February 2004. The Master ordered that the defendant pay the plaintiff the sum of $1,409,651.32 ("the claimed sum") and the plaintiff's costs of the proceeding fixed at $2,385.00, and that there be a stay of judgment of 30 days.

The proceeding was initiated by a writ filed on 11 July 2003 and came before the Master, as it now comes before the Court as presently constituted, on a summons by the plaintiff filed on 18 December 2003 for summary judgment against the defendant for the amount claimed in the indorsement of claim on the writ, on the ground that the defendant has no defence to the claim. The plaintiff relies on Rule 22.02 of the Rules and the inherent jurisdiction of the Court. The evidence was contained in two affidavits of Thu Vien and the exhibits thereto.

(1) Where the defendant has filed an appearance, the plaintiff may at any time apply to the Court for judgment against that defendant on the ground that the defendant has no defence to the whole or part of a claim included in the writ or statement of claim or no defence except as to the amount of a claim.

* "the income tax claim" in respect of a claim for unpaid income tax for the year ending 30 June 2002 and general interest thereon; and

* "the RBA deficit claim", in respect of primary tax debts under the BAS provisions of the Act, as defined in section 995-1(1) of the Income Tax Assessment Act 1997 allocated by the Commissioner of Taxation ("the Commissioner") to a Running Balance Account ("RBA") established for the defendant under section 8AAZC of the Taxation Administration Act 1953 ("the TAA") and general interest thereon.

Ms Mavroudis, for the plaintiff, relied on two certificates, exhibits TV6 and TV8, both signed by the plaintiff and dated 16 January 2004, certifying:

(a) in TV6, under section 255-45 of Schedule 1 of the TAA that:

(i) a notice of assessment as to income tax for the year ended 30 June 2002 had been served on the defendant, and taken to have been served on 4 June 2003; and

(ii) the sum of $404,749.19 was at the date of the certificate a debt due and payable by the defendant to the Commonwealth of Australia; and

(b) in TV8, under section 8AAZJ of the TAA that:

(i) a general interest charge of $61,354.26 accrued between 9 July 2003 and 16 January 2004 was payable on the RBA deficit debt pursuant to section 8AAZF and Division 1 of Part IIA of the TAA; and

(ii) the sum of $984,198.17 was at the date of the certificate the RBA deficit debt and was due and payable by the defendant to the Commonwealth of Australia.

Ms Mavroudis submitted, and I accept, that the effect respectively of sections 255-45 and 8AAZJ was, in the context of this proceeding, that those certificates constituted prima facie evidence of those matters.

Further, she relied on section 204(3) of the Income Tax Assessment Act 1936 ("the ITAA 1936") providing for the payment of a general interest charge on income tax unpaid by the due date, and section 8AAZF of the TAA, providing that if there was an RBA deficit debt existing at the end of a day, the general interest charge is payable by the tax debtor on that RBA deficit debt for that day.

She produced a work sheet indicating that the amount of the general interest charge payable by the defendant for the period 14 January 2004 to 26 February 2004, the date of the Master's order which is under appeal, was $20,703.96, being $6033.20 in respect of the income tax claim and $14,670.76 in respect of the RBA deficit claim.

However, the work sheet is not exhibited to an affidavit, and is expressed to relate to a period commencing on 14 January 2004, that is, before the date of the certificates, although I note that in Ms Mavroudis's written submissions she referred to it as related to the period commencing on 16 January 2004.

Ms Mavroudis submitted that the evidence before the Court established that the defendant was, at the date of the Master's order, indebted to the Commonwealth of Australia in the sum of $1,409,651.32, being the total of $404,749.19 in respect of the income tax claim, $984,198.17 being the RBA deficit debt, and $20,703.96 being the total general interest charge on both amounts.

No affidavit material in reply was filed by the defendant. Ms Mavroudis submitted that the Defence filed by the defendant did not disclose a valid defence, that there was no defence to any part of the claim, and accordingly that there ought to be an order for summary judgment against the defendant in terms of Rule 22.02.

It is not in issue that the defendant has not sought to take advantage of the machinery provided in Part IVC of the TAA for objections, appeals or review of assessments or other decisions of the Commissioner.

As to the income tax claim, Mr Rosen referred to the notice of assessment exhibited to the affidavit of Ms Vien of 18 December 2003, on which the certificate under section 255-45 relied. It shows a date of issue of 12 June 2003, although in the affidavit it is referred to as "taken to have been served on 4 June 2003"; and it states that the sum referred to is due and payable on 5 June 2003, 7 days before the certificate was issued. He submitted that this document did not establish that the alleged income tax debt was due and payable, and the inconsistencies raised a question as to whether the assessment had been served. He relied on the judgments of the High Court in DCT v Richard Walter Pty Ltd [1], adopted by McDonald J in DCT v Collie [2], as authority for the proposition that as Mason CJ said in Richard Walter [3] :

It is only after the Commissioner, having gone through the process of calculation, serves a notice of assessment on the taxpayer, that there is brought about an ascertainment of the taxable income and the tax payable for the purposes of s 166 . . .

However, those decisions were based on the terms of section 204 of the ITAA 1936 as it then stood, providing that the date for payment of income tax was related to the date of service of the notice of assessment. Section 204 has since been amended to provide that the date for payment of tax for a year of income is now related not to the date of service of the assessment, but to the due date for lodgment of a return of income (or in certain cases, not here relevant, as an alternative, to the date when a notice of assessment was given to the taxpayer).

Section 177(1) of the ITAA 1936 provides that a notice of assessment is conclusive evidence of the making of the assessment and, relevantly, that the amount and all the particulars of the assessment are correct. Mr Rosen relied on the judgment of Davies J in Re Thai; Ex parte DCT [4] as authority for the proposition that the due date was not a particular of the assessment which section 177(1) makes conclusive. However, that finding of His Honour also turned on the operation of the earlier version of section 204, which was not in force at any time relevant to this proceeding.

As to the RBA deficit claim, Mr Rosen submitted that there was no evidence as to service of the RBA statement, being exhibit TV7. However, he did not point to any legislative requirement that that document be served.

Finally, Mr Rosen submitted that the doctrine of equitable estoppel as enunciated in Waltons Stores (Interstate) Limited v Maher [5] would operate to prevent the plaintiff from asserting a cause of action as at 11 July 2003 when the writ and statement of claim were filed. However, he did not produce or foreshadow any of the evidence which would need to be relied upon to substantiate that submission.

I accept the submissions of Ms Mavroudis, save as to one matter. Mr Rosen submitted that the affidavit did not verify the whole of the sum claimed. For the reasons set out in [8] above, while accepting the statutory basis given in [7] above for the claim of moneys owing by way of general interest in respect of the period since the making of the certificates on 16 January 2004, I cannot be satisfied as to the amount set out on the work sheet as owing in respect of that claim.

For the reasons given, the appeal will be dismissed. There will be orders that the defendant pay to the plaintiff the amount shown as owing on the certificates exhibited as TV6 and TV8 and a direction pursuant to Rule 22.10 of the Rules that the amount of the general interest charge owing by the defendant for the period since the making of those certificates be ascertained by agreement of the parties or in default of agreement be assessed by a Master, leave being given for the plaintiff to enter judgment for the total amount owing by the defendant to the plaintiff, once ascertained.

Counsel may wish to make submissions as to the form of the orders and as to costs.

Administration Act 1953