Perdikaris v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT 1 Provision is made in the taxation legislation for deductions to be made from amounts paid to employees by way of wages or salaries or for amounts to be withheld from amounts paid to employees by way of wages or salaries. The regime which applied prior to 1 July 2000 was known as the 'PAYE' regime, and that which has applied since is known as the 'PAYG' regime. 2 This case concerns assessments of income tax for the years ended 30 June 1996 to and including 30 June 2003. That is to say, there are eight tax years under consideration. 3 In relation to each tax year, the respondent failed to credit the applicant with any amounts constituting deductions or amounts withheld from his salary by way of income tax. 4 The present application seeks review of the respondent's decision in respect of each of the tax years that the taxpayer was not entitled to a relevant PAYE credit or a PAYG withholding credit. The amounts for which credit is sought vary from $31,252 in 1996 to $49,179 in 2003. Review is also sought in respect of tax shortfall penalties in relation to the years ended 30 June 2001 to 30 June 2003 inclusive and general interest charges arising out of the matters to which I have referred. 5 In respect of the years ended 30 June 1996 to 30 June 1999 inclusive, s 221H(3) of the Income Tax Assessment Act 1936 (Cth) ('the Act') provided: '221H(3) If the sum of the deductions … is less than or equal to the tax payable, the Commissioner must credit the sum in payment or part payment of the tax.' 6 Reference to 'the deductions' was to deductions covered by s 221H(2) of the Act, which relevantly provided: '221H(2) Subsections (3) to (5) apply if: (a) an employer has made any deductions in respect of an employee under this Division … during a year of income;' 7 There are two companies which are said to have been the relevant employer of the taxpayer over the course of the eight years mentioned. It is said that in respect of the years ended 30 June 1996 and 30 June 1997 the relevant employer was Cleanfast Pty Ltd now known as CP Agents Pty Ltd ACN 062 002 019. It is said that the employer company in respect of the years ended 30 June 1998 to 30 June 2003 inclusive was Cleanfast Property Maintenance Agents Pty Ltd, now known as CP Jiff Pty Ltd ACN 078 361 369. The income tax returns lodged by the applicant with the respondent do not necessarily accord with the information that I have just set out as to the claimed employer. 8 The present application is for judicial review under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and/or s 39B(1) of the Judiciary Act 1903 (Cth) (when taken with s 75 of the Constitution of the Commonwealth of Australia). The relevant decisions of the Commissioner, the review of which is sought, are said to have been made in late 2006. 9 The application for review was filed upon 27 March 2007 following the institution of earlier proceedings in the Federal Magistrates Court of Australia which were discontinued by consent on the basis that the current proceedings would then be instituted. A number of directions hearings have taken place in the current proceedings over some time. On 7 June 2007 an order was made in respect of the filing and service of affidavits on behalf of the respondent. Time for compliance with that order was extended on 13 August 2007, 15 August 2007, and yet again on 31 August 2007. A further order extending the time was made on 4 October 2007 and, as I understand it, affidavits were filed by the respondent on 4 and 5 October 2007. 10 An order was also made on 4 October 2007 that the applicant file and serve any evidence in reply on or before 18 October. 11 The applicant now seeks to read an affidavit of the applicant sworn 22 October 2007. Counsel for the respondent has objected to the whole of the affidavit on three different bases, the last of which was that the affidavit was not served on the respondent until, I assume, 22 October 2007, that is to say, two days ago. 12 Order 14 rule 7(1) of the Federal Court Rules provides: '(7)(1) A party intending to use an affidavit shall serve it on each other interested party not later than a reasonable time before the occasion for using it arises.' 13 If the only matter to consider was the lateness of the filing of the affidavit, I would allow it to be read. However, there are two other objections that are taken. The first is I think fairly summarised as relevance. The argument that is advanced is that the applicant seeks to place before the court factual evidence which may have been material to the consideration by the respondent of the matters in question in late 2006, but which was not placed before the respondent by the applicant at that time, notwithstanding several requests made of the applicant for the provision of further information to allow the respondent to determine whether or not amounts had been properly deducted or withheld by the applicant's employer in accordance with the relevant iteration of s 221H of the Act. 14 It is obvious, in my view, that material going to the merits of the respondent's decision cannot now be raised on an application for review of the relevant decisions which were made in late 2006. The material which is properly before the Court on the application for review is material that was before the respondent at the time or material going to the process whereby the decisions of the respondent were reached. It would seem to me that the material now sought to be advanced is not relevant and it should be rejected. 15 A further objection is taken in respect of what I might describe as hearsay or matters of form. The affidavit which the applicant seeks to read, and to which objection has been taken, annexes a series of documents in the form of financial accounts of Cleanfast Property Maintenance Agents Pty Ltd, referred to as 'Cleanfast Property Maint Agents P/L' and a 'PAYG Payment Summary Statement' for Cleanfast Property Maintenance Agents Pty Ltd. 16 In respect of the documents, it is not apparent from the terms of them that they contain representations made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted facts. The affidavit sought to advance a proposition that the documents were prepared by a company called 'Clean Also Pty Ltd', about which nothing else is disclosed. 17 There is no evidence at all to indicate: · who if anyone, at Clean Also Pty Ltd was responsible for preparing the Cleanfast Property Maintenance Agents Pty Ltd documents or · the material relied upon to undertake that task or · the time when the task, if any, was undertaken. 18 It seems to me that the only parts of the affidavit which are admissible are the first three paragraphs. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.