Deputy Commissioner of Taxation v William Murray Robertson & Deputy Commissioner of Taxation v Stephanie Anne Robertson

Judgment 1These are related matters, which were heard together. The plaintiff, the Deputy Commissioner of Taxation, has brought separate proceedings against each of the defendants, William Robertson and Stephanie Robertson, but the pleadings in each of them, and the facts and issues raised by them, are identical. 2The defendants are husband and wife, and they are partners in the Partnership of William M and Stephanie A Robertson, trading as Lasermed Australia and Lasermed Australia Property. The proceedings against them arise from their alleged failure to meet their tax liabilities in respect of the partnership. The amount claimed in each matter is in excess of $2,000,000, but it is the one debt for which they are jointly and severally liable. 3I am indebted to counsel for the plaintiff, Ms Foda, for her explanation in written submissions of the nature of the proceedings and the somewhat labyrinthine legislative framework on which they are based. Her recitation of the facts is derived from the affidavit evidence of Ms Lynette Pascoe, an officer of the Australian Taxation Office. 4Pursuant to s 444-30 of Sch 1 of the Taxation Administration Act 1953 ("the TAA 1953") the defendants, as partners, are jointly and severally liable to pay an amount that is payable under Sch 1 of the TAA 1953 or an indirect tax by the partnership. Section 2 of the TAA 1953 states that an indirect tax has the meaning given by the Income Tax Assessment Act 1997 ("the ITAA 1997"). Section 995-1 of the ITAA 1997 states that an indirect tax includes GST. 5The plaintiff claims that the defendants failed to meet their tax liabilities under the business activity statements ("BAS") provisions as defined in subs 995-1(1) of the Income Tax Assessment Act 1997, primary tax debts payable as administrative penalties due under Pt 4-25 of Sch1 of the TAA 1953 and subsequent general interest charges. The Commissioner established running balance accounts ("RBAs") for the partnership in relation to Lasermed Australia and Lasermed Australia Property in respect of these liabilities. The Commissioner issued Notices of Assessment of Net Amount pursuant to subs 105-5(1) of Sch 1 to the TAA 1953 in relation to Lasermed Australia and Lasermed Australia Property and Notices of Assessment and Liability to Pay Penalty. The RBAs are in deficit and therefore there is a deficit debt in favour of the Commissioner pursuant to s 8AAZH of the TAA1953. The RBAs deficit debt as at 10 January 2012 was in the amount of $2,072,222.34. 6Ms Foda explained, by way of background, that pursuant to s 8AAZC of the TAA 1953 the plaintiff established two RBAs, one each in respect of the primary tax debts of Lasermed Australia and Lasermed Australia Property. From time to time the balance on the RBAs was in favour of the plaintiff, and was accordingly an RBA deficit debt pursuant to s 8AAZA. 7Pursuant to s 8AAZF(1) of the TAA 1953, general interest charge ("GIC") is imposed on the balance of the RBAs at the end of each day where there is a deficit debt. Pursuant to this section the balance of the RBAs are altered in favour of the plaintiff by the addition of the GIC to the respective RBA. 8The partnership lodged BAS on behalf of Lasermed Australia and Lasermed Australia Property. Relying upon these BAS, the plaintiff issued the partnership refunds both in relation to Lasermed Australia and Lasermed Australia Property. 9The plaintiff undertook an audit of the partnership's financial affairs arising out of the BAS that had been lodged in relation to Lasermed Australia and Lasermed Australia Property. As a consequence of the audit the plaintiff prepared revised BAS in relation to Lasermed Australia and Lasermed Australia Property. Pursuant to s 8AAZD of the TAA 1953 the plaintiff allocated the revised BAS, primary tax debts to the respective RBAs. 10On or about 7 September 2010 the plaintiff served the partnership with Notices of Assessment of Net Amount pursuant to s 105-5(1) of the TAA 1953 in relation to Lasermed Australia and Lasermed Australia Property. 11The defendants had over-claimed credits for GST in respect of the periods 1 August 2006 to 31 July 2009 in relation to Lasermed Australia and the periods 1 August 2006 to 30 September 2009 in relation to Lasermed Australia Property. As a result of their over-claiming those credits, pursuant to s 284-75 of Sch 1 to the TAA 1953 they also became liable to pay an administrative penalty for tax shortfall in respect of those periods. 12Pursuant to s 298-30 of Sch1 to the TAA 1953 the plaintiff made an assessment of the administrative penalty referable to Lasermed Australia in the amount of $418,978.95, and the administrative penalty referable to Lasermed Australia Property in the amount of $392,317.65. 13The Notices of Assessment and Liability to Pay Penalty in relation to Lasermed Australia and Lasermed Australia Property were given to the defendants by way of service via pre-paid post on 16 September 2010. There is no dispute that the defendants were served with those notices. 14There is no dispute that the defendants have failed to pay the GST in relation to those Notices of Assessment of Net Amount, and the penalties in relation to those Notices of Assessment and Liability to Pay Penalty. 15I heard motions by the plaintiff and the defendants. The plaintiff seeks summary judgment, together with the costs of the proceedings. The defendants, who are not legally represented, seek an order striking out the statement of claim and the plaintiff's motion seeking summary judgment. Mr Robertson argued the motion at the hearing, having been authorised by his wife to represent her interest. 16Each of the defendants has filed, in identical terms, a defence and a cross-claim. It is the plaintiff's case that neither document raises any matter in opposition to the claim which is capable of resolution in this court. 17Put shortly, the defence raises three matters: