The s 268-40(4) statutory revocation issue
44 Transtar Linehaul submitted that the current proceedings are proceedings that relate to the recovery of the unpaid amount of the estimate; it was next said that Transtar Linehaul filed an affidavit which satisfied s 268-90(2)(a)(i) and 268-90(3) with the consequence that the estimate was revoked and deemed never to have been made. Thus it was further submitted that the garnishee notices would fall.
45 The respondent accepted only that a s 260-5 garnishee notice under the Schedule depended on, relevantly, an amount of a tax related liability, in this case the estimate.
46 For the respondent it was submitted that the proceedings referred to in item 2 must be recovery proceedings commenced by the Commissioner which these were not; therefore the filing of affidavits did not lead to revocation under s 268-40. Alternatively the bare assertions in paragraph 9 of the first affidavit and in paragraphs 19 and 20 of the second affidavit did not verify facts sufficient to prove that the underlying liability never existed or that Transtar Linehaul did not withhold amounts. Alternatively it was submitted that the Commissioner is permitted to challenge the facts asserted in the affidavit and, having regard to the evidence, the relevant assertions of Mr Searle in his affidavits should be rejected.
47 I next consider these competing submissions. It seems that there is no direct authority on the points.
48 As to item 2 of s 268-40(1), for a number of reasons I conclude that Transtar Linehaul is not a "party to proceedings before a court that relate to the recovery of the unpaid amount of the estimate" within item 2.
49 First, the statutory context suggests that recovery proceedings are those referred to in s 268-5, the object of Division 268 being to enable the Commissioner to take prompt and effective action to recover amounts not paid as required by Part 2-5 (Pay as you go (PAYG) withholding).
50 Secondly, in my view the scheme of the legislation is that the estimate is revoked in such recovery proceedings so that the court is then in a position to determine the underlying liability rather than the accuracy of the estimate. This is supported by Transtar Linehaul's contention that what the section requires for an affidavit is slight.
51 Thirdly, paying close attention to the terms of item 2, it is the proceedings which must relate to the recovery of the unpaid amount of the estimate. Here, the proceedings are for a declaration that the estimate is revoked in proceedings brought for that purpose. Transtar Linehaul's contention was that whenever proceedings are commenced for a declaration that an estimate is revoked and a formal affidavit is filed and served within 14 days of commencing the action stating that no amounts were withheld, then the estimate is revoked. I do not attribute that intention to the legislature.
52 There is in my opinion a difference in the present context between proceedings that relate to the recovery of the unpaid amount and proceedings that forestall the recovery of that amount.
53 The present proceedings are not, in my opinion, proceedings for the recovery of any money. A parallel is provided by cases concerning s 51A of the Federal Court of Australia Act 1976 (Cth): see Comptroller-General of Customs v Kawasaki Motors Pty Limited (No 2) (1991) 32 FCR 243 where at 266-267, Hill and Heerey JJ held that an application which sought, inter alia, an order under s 16(1)(d) of the AD(JR) Act directed to the Comptroller-General for the repayment of excess duty was not a proceeding "for the recovery of any money" within the terms of s 51A. See also Commonwealth of Australia v SCI Operations Pty Limited (1998) 192 CLR 285 at 327 [99] per Kirby J; and Commissioner of State Revenue (Vict.) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 92 per Brennan J, Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at [41] per Gleeson CJ, Gummow, Hayne and Callinan JJ and at [105] per Kirby J and Elsinora Global Ltd v Commissioner of Taxation (2006) 155 FCR 413 ("Elsinora").
54 Elsinora concerned notices under s 255 of the ITAA 1936. It was held that s 51A had no application in the circumstances of the case: see per Young J at [37]-[38], Gyles and Stone JJ concurring.
55 Here of course the legislation proceeds by reference to "you are a party to proceedings before a court that relate to the recovery of the unpaid amount of the estimate".
56 "In respect of", "in relation to" and similar phrases are considered in Pearce DC and Geddes RS, Statutory Interpretation in Australia (7th ed, LexisNexis Butterworths, 2011) at [12.7]. The authors refer at page 376 to Workers' Compensation Board of Queensland v Technical Products Pty Limited (1988) 165 CLR 642 at 653-654 for the proposition that the phrase gathers meaning from the context in which it appears and it is that context which will determine the matters to which it extends.
57 This should be seen as an example of the modern approach to statutory construction more fully explained in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 ("Project Blue Sky").
58 In Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510 ("Travelex") French CJ and Hayne J said at [25]:
It may readily be accepted that "in relation to" is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ (HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 at 563 [35] per Hill J). It may also be accepted that "the subject matter of the inquiry, the legislative history, and the facts of the case" ((2005) 143 FCR 553 at 563 [35] per Hill J) are all matters that will bear upon the judgment of what relationship must be shown in order to conclude that there is a supply "in relation to" rights.
59 The applicant relied on IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466. This case considered the terms of an arbitration clause in an agreement which included the sentence "any controversy or claim arising out of or related to this Agreement or the breach thereof will be settled by arbitration". The case did not concern the construction of a statute and did not refer to Project Blue Sky. I would not apply in the present statutory context the dicta of Clarke JA or of Handley JA on which the applicant relied, at pages 483B and 487B of the report, that is, that "[t]he phrases "in relation to" or "related to" are of the widest import and should not, in the absence of compelling reasons to the contrary, be read down": (citation omitted). Alternatively, I find that the context and the unlikely result of the applicant's construction do provide compelling reasons to the contrary. The approach of Kirby P at 477C-D was different although the entire Court agreed in the conclusion that the arbitration clause was wide enough to include claims under s 52 of the Trade Practices Act 1974 (Cth).
60 Considering legislative history, as suggested by Travelex, I note that in its form as originally enacted the equivalent provision was s 222AHC of the ITAA 1936 which provided:
This section has effect for the purposes of proceedings, in so far as they relate to the recovery of the unpaid amount of an estimate.
This is a different expression of the same idea and is, to my mind, neutral.
61 The examples given in s 268-20(2), that is, that the Commissioner may take:
(a) proceedings to recover the unpaid amount of the estimate; or
(b) proceedings to recover the unpaid amount of the underlying liability; or
(c) proceedings of both kinds;
provide some support for the construction I prefer although, by s 15AD of the Acts Interpretation Act 1901 (Cth), the examples are not to be taken to be exhaustive. I make the same observation about the example below the table in s 268-40 that for the purposes of item 2 of the table, taking a procedural step as a party to proceedings includes entering an appearance, filing a notice of intention to defend, or applying to set aside judgment entered in default of appearance.
62 Lastly, the extrinsic material I have set out above suggests that what the legislature had in mind was that the affidavit would operate where the Commissioner brought proceedings to recover the unpaid amount of the estimate.
63 I add that if, as I have concluded, the claims for relief in respect of the estimate do not mean that the proceedings relate to the recovery of the unpaid amount of the estimate then the same conclusion follows in respect of the other claims, being the consequential claim in respect of the garnishee notices, the administrative law attack on the garnishee notices or on the decision to issue them and the administrative law attack on the refusal by the Commissioner to allow a longer period for the giving of a statutory declaration for the purposes of item 1 of s 268-40(1) of the Schedule. As to the consequential claim in respect of the garnishee notices, that claim is more remote from proceedings before a court that relate to the recovery of the unpaid amount of the estimate since what is the subject of the garnishee notices is amounts owed or which may later be owed by the third party to, in this case, Transtar Linehaul.
64 This conclusion disposes of the s 268-40(4) statutory revocation issue.
65 In case I am wrong, I consider the next aspect of the case on the s 268-40(4) point which was, in the alternative, whether the affidavit material "verifies facts sufficient to prove that the underlying liability never existed". Is this a formal requirement, that is, is it sufficient to enliven the provision that the affidavit makes a formal statement? Further, may the material be tested by the respondent?
66 There is a preliminary question of construction which is the relationship between s 268-40(4) and s 268-90 which "applies to" an affidavit filed for the purpose of s 268-40 in relation to the estimate. The latter section provides relevantly that the affidavit must verify the fact that you did not withhold any amounts under Division 12 during the relevant period and what has been done to comply with Division 16 (Payer's obligations and rights) in relation to such amounts. The former section relevantly provides that the estimate is revoked if the affidavit verifies facts sufficient to prove that the underlying liability never existed. In my opinion, on the facts of this case at least there is no conflict if the words "verify . . . the fact that you did not" withhold any amounts under Division 12 mean the same as the deponent verifies facts sufficient to prove that the underlying liability never existed.
67 The ordinary meaning of 'verify' is "prove to be true" although it may mean "to state to be true" by affirmation or affidavit.
68 The relevant definitions of "verify" in the Macquarie Dictionary are:
1. to prove (something) to be true, as by evidence or testimony; confirm or substantiate.
2. …
3. to state to be true, especially in legal use, formally or upon on oath … .
69 The relevant definitions in the Oxford English Dictionary of the word verify are:
1.a. trans. Law. To prove by good evidence or valid testimony; to testify or affirm formally or upon oath. …
2. To show to be true by demonstration or evidence; to confirm the truth or authenticity of; to substantiate:
. . .
70 Secondly the expression "facts sufficient to prove" suggests that the affidavit must deal with the facts necessary to establish the statutory criterion, that is, that the relevant underlying liability never existed.
71 The use of the word "sufficient" suggests that there may be evaluation by the court in order to conclude, in that curial setting, that there are enough facts to prove that the underlying liability never existed.
72 Does the provision convey the same idea as a prima facie case, in the sense that if the evidence remains as it is there is a probability the plaintiff will be held entitled to relief: see Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622.
73 Even if there be an analogy, it does not follow that the provisions require no more than a formal statement or that the material relied on may not be the subject of evaluation or testing. Depending on the complexity of the subject-matter, to establish even a prima facie case the evidence will often need to be substantiated beyond the level of mere assertions about the contents of records which are not produced or mere conclusions about complex or mixed questions of fact and law.
74 Further, the affidavit must be admissible according to the rules of evidence.
75 That evaluation must be so involved where appropriate in the context of court proceedings follows also from the fact that a standard of proof must be applied, that is, there must be facts sufficient to prove the matter on the balance of probabilities in a civil case.
76 In my view the distinction being drawn by s 268-40(4) is that it is not necessary, in order to effect the statutory revocation referred to, that the corporation file all the evidence as if the matter were a full scale trial on the estimate.
77 As I have said, in my view, the scheme is that where such an affidavit is filed and served within time in proceedings that relate to the recovery of the unpaid amount of the estimate then the estimate is revoked and the matter proceeds by reference to the underlying liability.
78 In the present case, in my opinion, to enliven s 268-40(4) it was necessary to do more than assert in affidavits, without reference to primary facts or to primary documents which must have existed, that during the period 1 January 2010 to 31 March 2011, no amounts on account of PAYG withholding were withheld from payments made to any person or that Transtar Linehaul had no employees receiving salary or wages, and paid no amount as salary or wages or at all to any person as an employee, from which it might have withheld an amount on account of PAYG or that during that period Transtar Linehaul withheld no amount on account of a PAYG obligation of any description or that Transtar Linehaul had no liability to withhold amounts on account of PAYG withholding obligations and the business of Transtar Linehaul was arranged to that end.
79 Put differently, this material dealt in a summary way with matters which were by no means pure questions of fact. In addition it dealt with those matters in such a rolled up and conclusory way that it did not in my view verify facts sufficient to prove that the underlying liability, to pay to the Commissioner the amount that Transtar Linehaul withheld, never existed.
80 If the proper test is akin to establishing a prima facie case then, looking only at the affidavit material, that point was not reached. I find that the affidavits did not verify facts sufficient to prove that the underlying liability never existed. In this respect I take into account that the 14 day period, subject to a longer period allowed by the court, suggests that in some cases the affidavit may be a relatively simple one.
81 Further, I see no reason why in a case such as the present, and assuming the proceedings relate to the recovery of the unpaid amount of the estimate, the affidavit may not be tested in the ordinary way. Were it otherwise a formally correct but inherently or latently flawed affidavit would enliven s 268-40(4).
82 So viewed, in my opinion the affidavits did not verify facts sufficient to prove that the underlying liability never existed.
83 Part of the immediate statutory context is the non-curial or administrative path to reduction of the amount of the estimate or revocation of the estimate by means of a statutory declaration. The language of the section is that the statutory declaration be "to the effect that" the underlying liability never existed.
84 There should be a broad consistency between the effect of the two paths, while bearing in mind that one is administrative and the other is curial.
85 In my view there is an equivalence to the requirement that the affidavit "verifies facts sufficient to prove" in that, in the case also of a statutory declaration, a merely formal statement without substantiation would not always answer that requirement and would not do so in a matter of any complexity. In my view the expression "to the effect that" directs attention to the substance of the statutory declaration rather than to its form. In my opinion, as with the affidavit, the statutory declaration need not in every case contain the entirety of the relevant material.
86 Further, in my view, the recipient of the statutory declaration may evaluate it in order to assess its substance or effect, although in the case of dispute it would ultimately be for a court to decide whether the statutory declaration was to the effect required by the statute.
87 Thus there is a broad similarity in the present context between what is required of a statutory declaration and what is required of an affidavit.
88 This construction is confirmed by s 268-90 which applies in the same terms to a statutory declaration given or an affidavit filed for the purposes of s 268-40.
89 My conclusion that the affidavits filed by Transtar Linehaul did not verify facts sufficient to prove that the underlying liability never existed is of itself also sufficient to dispose of the s 268-40(4) statutory revocation issue.
90 For completeness I next consider the related issues which arise under s 12-35 and s 16-70. That is, I now assume that these are proceedings within item 2 and that the affidavit material may be evaluated in order to decide whether it does verify facts sufficient to prove that the underlying liability never existed. I note that Transtar Linehaul objected to the relevance of this evidence, consistently with its submission that these were proceedings that related to the recovery of the unpaid amount of the estimate and that an affidavit or affidavits had been filed and served verifying facts sufficient to prove that the underlying liability never existed.
91 In my view Transtar Linehaul did pay wages to individuals as employees. I next set out the facts I find and on which I base this conclusion. It is to be recalled that s 12-35 of the Schedule refers to whether an entity pays wages to an individual as an employee whether of that or another entity.
92 Relevantly there were two companies: Transtar Express Pty Ltd ("Transtar Express") and the applicant, Transtar Linehaul. Mr Searle was appointed a director of Transtar Express on 7 August 1981. He was also a shareholder at that time. Mr Searle's father, John Wesley Searle, was also a director at that time. At no stage after 1981 has there been any other director of Transtar Express other than Mr Searle, his father or at some stages the two of them together. Mr Searle remained a shareholder of Transtar Express at least up until the end of 2008. At that time he assigned his shares back to his father for no consideration other than an unwritten agreement between them that all outstanding debts to him would be settled with interest. Mr Searle is a creditor of Transtar Express. Up to the period to late 2008, the business of Transtar Express was in the light transport industry. In more recent times the business of Transtar Express included the transportation of goods in trucks. From 2000 the transportation business of Transtar Express has included larger trucks transporting goods between cities including interstate. Transtar Express has always employed people to drive those trucks and to maintain or clean those trucks.
93 Mr Searle remained a director of Transtar Express continuously from August of 1991 to 18 January 2005 and during that period he was involved in the day-to-day management of Transtar Express. During that period there were lengthy periods of time when his father was overseas. On 18 January 2005, Mr Searle was convicted in the Local Court of two offences under section 1308 of the Corporations Act 2001 (Cth), those convictions relating to him, as a director of a company, lodging documents with the Australian Securities and Investment Commission which included false or misleading information. On 18 January 2005 Mr Searle resigned as a director of Transtar Express. On 7 March 2005 his father, John Searle, was appointed a director of Transtar Express. On 23 February 2006 Mr Searle became involved again in the management of Transtar Express being reappointed as a director on 23 February 2006. On 19 December 2008 Mr Searle again resigned from the board of Transtar Express.
94 In relation to Transtar Linehaul, the company was incorporated in December 2006. Mr Searle was appointed its sole director. He was the sole shareholder. At least from 2008 Mr Searle was involved in the day-to-day management of Transtar Linehaul and he was responsible for managing the affairs of Transtar Linehaul when he decided to set up in the transport industry in his own right, that is, separate from his father. Yet his father was appointed a director of Transtar Linehaul on 27 October 2008. His father was also involved in the big management decisions from that time.
95 The company did not trade until early 2009. It contracted with clients to transport goods, usually interstate. These were clients who had been clients of Transtar Express. According to Mr Searle, Transtar Linehaul did not employ anyone. To carry on its linehaul business Transtar Linehaul purchased plant and equipment and a number of trucks, prime movers and trailers. Transtar Linehaul operated those trucks and trailers in the conduct of its business. Transtar Linehaul carried goods for a majority of the clients, all the major parcel and courier companies, which had previously been clients of Transtar Express.
96 During 2009 and 2010, Transtar Express and Transtar Linehaul effectively operated out of the same premises. The two companies had a postal address in common. The office of Transtar Linehaul was in Gladesville. Transtar Linehaul's trucks and plant and equipment were at York Road, Ingleburn, with other plant and equipment owned by Transtar Express.
97 According to Mr Searle, Transtar Linehaul entered into unwritten contracts with Transtar Express whereby Transtar Express carried out transport on behalf of Transtar Linehaul.
98 In light of the terms of s 12-35 of the Schedule, which refers to whether an entity pays wages to an individual as an employee whether of that or another entity, I do not need to decide whether the employees were of Transtar Linehaul or of Transtar Express. It was common ground that Transtar Express had employees who were paid as outlined below.
99 There were two accounts at the Bank of Queensland, one in the name of Transtar Linehaul and one in the name of Mr Searle.
100 As to the account in the name of Transtar Linehaul, that account was credited with payments from Transtar Linehaul's customers in respect of the transport services which Transtar Linehaul supplied to them albeit, according to Mr Searle, by persons who were not employees of Transtar Linehaul but of Transtar Express.
101 The wages of the employees of Transtar Express were paid each week out of the cheque account in the name of Mr Searle. This was processed by Ms Susan Arentz. Each week, shortly before the wages of the employees of Transtar Express were paid out of that account, funds were transferred into that account, that is the account in Mr Searle's name, from the account in the name of Transtar Linehaul. Mr Searle accepted, and I find, that the money in the account in his name was Transtar Linehaul's money. That account was treated in the accounts of Transtar Linehaul as being its bank account.
102 In my opinion it is not relevant to the statutory question that Transtar Express may have asked for the payments to be made nor that each time wages were paid out of the account in Mr Searle's name to employees, that that payment was or may have been added to a loan account between Transtar Express and Transtar Linehaul. I note that Mr Searle accepted that the loan between Transtar Express and Transtar Linehaul was not documented in any form of loan agreement, no interest was paid and there were no commercial terms attaching to the loan.
103 As I have indicated, I find that Transtar Linehaul did pay wages to individuals as employees within the meaning of s 12-35 of the Schedule.
104 I also find, for the reasons which follow, that Transtar Linehaul withheld amounts under Division 12. This is a question of construction as well as of fact.
105 As to construction, in s 995-1(1) of the Income Tax Assessment Act 1997 there are definitions of "amount withheld", "withholder", "withholding payment" and "withholding payment covered by a particular provision in Schedule 1". None of them seems presently useful. There is no definition of "withhold" or "withholding". There is nothing that deems "withhold" to mean "ought to have withheld".
106 The definitions given in the Macquarie Dictionary are:
1. to hold back; restrain of check.
2. to refrain from giving or granting: to withhold payment.
107 In the Oxford English Dictionary the most apposite definition is:
2. to keep back; to keep in one's possession (what belongs to, is due to or is desired by another); to refrain from giving, granting, or allowing.
108 In Commissioner of Taxation v Sargon (1985) 75 FLR 394 ("Sargon") Ormiston J was considering an action by the Commissioner for instalments of income tax deducted by the taxpayer as an employer. More specifically, the action was for the balance of tax instalment deductions alleged to have been made by the defendant as a group employer for the purposes of Div 2 of Pt VI of the ITAA 1936. His Honour was dealing with the ITAA Act 1936 in operation during the years 1977 and 1978.
109 In Sargon, the defendant's case was that either he or one of his employees actually paid the wages each week to the employees but that each week during the relevant period sufficient moneys only to pay the employees' net wages were paid by that company, so that no sums in respect of income tax were deducted by him in the sense that no sums were or could have been retained by him in order to pay "group tax" to the Deputy Commissioner in accordance with the requirements of s 221S(5) of the ITAA 1936.
110 Essentially the dispute was whether a "deduction" of income tax instalments, the amount of which an employer was made liable to pay under s 221F of the ITAA 1936, required only the reduction of an employee's gross salary or wages by the arithmetical subtraction of the prescribed amount of income tax and payment to him of the net amount resulting from that calculation, or whether it also required the retention of the sum deducted by the employer.
111 The defendant's case was simply that, as he never had the money to remit to the Commissioner under s 221F, he could not have "deducted" and did not "deduct" the required instalments of income tax within the meaning of that expression and Div 2 of Pt VI of the Act. That was said to be sufficient answer to the plaintiff's claim as no proceedings had been brought under s 221N for failing to make deductions.
112 His Honour said at 397:
I do not consider that it is necessary to resolve precisely how reliable was the defendant's version of events. I have reached the conclusion that, on his own admissions, he had made "deductions" from the wages paid to his employees at the prescribed rates, in accordance with s 221C(1A), but had failed to deal with the amounts so deducted in the manner required by Div 2 and in particular had failed to pay the amount of the deductions to the Commissioner, as required by s 221F(5)(a). For this purpose I have concluded that "deduction" within the meaning of the word used in the Division involves the arithmetical subtraction of instalments of income tax at the prescribed rates from the gross income of employees and the payment to them of only the resulting remainder of their wages, that is their net pay. The Division does not specifically require the retention of the amounts so deducted in any identifiable form. Although the provisions contained in this Division assume that a group employer will have sufficient funds to pay the Commissioner the amount of the deductions each month and impose penalties if he fails to do so, he is not obliged to pay those amounts into a trust account or any separate bank account or to deal with them in a way that separates those amounts from his other moneys.
In my opinion, upon a proper construction of all the provisions contained in the Division, there is nothing in the Division which requires the separate retention by an employer of the amount so deducted. Nor is there any authority which requires me to hold that it is implicit from the provisions of the statute that the employer is required to retain those amounts separately.
113 Finally, at 403-404, Ormiston J said:
My conclusion is that the authorities do not compel me to hold that the word "deduction" in any sections of the Division requires the retention of the sums which have been deducted by an employer of group tax instalments. It follows that the defendant in the present case deducted such instalments when paying his employees their net wages during the relevant period and that there was, within the meaning of s. 221P, a failure to deal with the amount so deducted in the manner required by the Division, notwithstanding the failure to set aside or retain the amounts so deducted. Whether or not he had identifiable or unidentifiable sums in his hands representing those deductions, he is liable to pay the amount for those deductions to the Commission in this action.
114 Sargon's case was considered in Cassaniti v Federal Commissioner of Taxation (2010) 186 FCR 480. In general terms the taxpayer sought, amongst other things, a declaration that he was entitled to credits for the years ended 30 June 2002, 2003 and 2004 in certain amounts being the amounts said to be deducted by his employer, Reliance Financial Services Pty Ltd, as trustee for the Reliance Services Trust from salaries or wages paid to the taxpayer.
115 Edmonds J noted at [7] that it lay at the heart of the taxpayer's case that all that was necessary for a withholding to be made was that there be a mathematical subtraction of amounts from his gross salary or wages so that what was paid to him was a net amount; in other words "withhold" in s 12-35 of Schedule 1 involved no more than the words "make a deduction" in s 221C(1A) of the ITAA 1936 and did not specifically require the retention of the amounts so withheld - deducted in any identifiable form. This submission was made with reference to Sargon's case.
116 The Commissioner accepted that a net amount was paid on a weekly basis into the taxpayer's Commonwealth Bank account of account of salary or wages. The Commissioner did not accept that the amount paid was a reduced amount, that is, a net amount resulting after the withholding of a PAYG amount from a gross amount of salary or wages.
117 At [161] Edmonds J in Cassaniti applied what Ormiston J had said in Sargon about "deduction".
118 At [167] Edmonds J said:
Where there is a controversy about the occurrence of a withholding the surrounding circumstances may either support or detract from the drawing of an inference that a withholding was in fact made. There are a number of reporting requirements where an employer makes a PAYG withholding. In particular, pursuant to s 16-150 of Sch 1 to the TAA the payer is required to give notification to the Commissioner of the amounts it was required to pay to the Commissioner under s 16-70(1) on or before the day on which the amount is due to be paid (regardless of whether it is paid).
119 At [173] Edmonds J rejected the submission on behalf of the taxpayer that the scheme of the legislation was that a withholding (or deduction) was taken to have been made by virtue of the liability of the entity to withhold, regardless of whether any amount was actually withheld or not.
120 The facts I find, and on which I base my conclusion, are that the evidence disclosed no more than that Ms Arentz, the administration manager with Transtar Express and who was responsible for the payroll, looked at what the drivers' weekly trips were and then entered all of the data onto MYOB and then each Friday she made online transfers of the funds from the Bank of Queensland in Mr Searle's name into their accounts.
121 Her evidence was that each employee's details were already set up in the system with their hourly rate and, depending on where they drove to, that information was already set up there and flagged for each person. Ms Arentz put their name in, altered the pay date accordingly and then marked off how many trips they did, or how many hours they needed to be paid for and the software did all the calculations.
122 It is clear that only net amounts were paid to the employees: there were in evidence payment summaries recording "total tax withheld" from the payment of wages. There was however no direct evidence as to whether only the net amounts were transferred from the Bank of Queensland account in Mr Searle's name or whether, somehow, a gross amount was thus transferred not to each employee but to Transtar Express. The inference I draw is that only the net amounts were so transferred since the evidence was that Transtar Express's bank accounts showed almost no activity over that period. Further there was no evidence given by Mr Searle or by Ms Arentz that gross amounts were so transferred.
123 It follows that, applying Sargon, Transtar Linehaul was an entity that "withholds an amount under Division 12" in relation to each of the persons to whom amounts were transferred from the Bank of Queensland account in Mr Searle's name to their account as wages.