A J Holdings (NSW) Pty Limited and Cumedo Pty Limited v Chief Commissioner of State Revenue

Case •

[2013] NSWADT 156

•

09 July 2013

Administrative Decisions Tribunal


New South Wales

Medium Neutral Citation: A J Holdings (NSW) Pty Limited & Cumedo Pty Limited v Chief Commissioner of State Revenue [2013] NSWADT 156
Hearing dates:3 May 2013
Decision date: 09 July 2013
Jurisdiction:Revenue Division
Before: R J Perrignon, Judicial Member
Decision:

1) The decision of the Chief Commissioner made on 1 May 2012, that Cumedo Pty Limited is liable to pay the quarterly instalment of gaming machine tax in respect of the period 1 October 2011 to 31 December 2011, is affirmed.

2) The decision of the Chief Commissioner made on 4 May 2012, that A J Holdings Pty Limited is liable to pay the quarterly instalment of gaming machine tax in respect of the period 1 October 2011 to 31 December 2011, is affirmed.

Catchwords: Gaming machine tax; when payable; meaning of "due" in section 7(4) of the Gaming Machine Tax Act 2001;
Legislation Cited: Gaming Machine Tax Act 2001
Taxation Administration Act 1996
Liquor Act 2007
Cases Cited: Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1
Papacostas v Chief Commissioner of State Revenue [2006] NSWADT 57
Category:Principal judgment
Parties: A J Holdings (NSW) Pty Limited & Cumedo Pty Limited (Applicants)
Chief Commissioner of State Revenue (Respondent)
Representation: Counsel
L Sanderson (Respondent)
Shanahan Tudhope Lawyers (Applicants)
Crown Solicitors Office (Respondent)
File Number(s):126111

Reasons for decision

  1. The applicants seek orders setting aside decisions made by the Chief Commissioner on 1 and 4 May 2012, to the effect that they are liable for gaming machine tax for the period 1 October 2011 to 31 December 2011 ('the Quarterly Instalment').

  1. The facts are not in dispute. For many years, the applicants have owned a hotel at Lismore called "Tommy's Tavern". In 2007 they leased it to Buckoe Pty Limited, which operated the hotel with its licensee, a Mr Parrott. In November 2011, a dispute arose between landlords and tenant as to the payment of rent. On 30 December 2011 the locks were changed by the landlords, and formal demand was made for arrears in rent.

  1. On 4 January 2012, the applicants began to trade from the premises. On 16 January 2012, an invoice for the Quarterly Instalment was issued by the CMS licensee, addressed to Mr Parrott at the hotel. On 18 January 2012, the Chief Commissioner of State Revenue approved payment of the invoice by three monthly instalments in January, February and March 2012.

  1. On 23 January 2012, the Chief Commissioner attempted to appropriate the Quarterly Instalment, or so much of it as was then payable in accordance with the instalment arrangement, from a nominated bank account. The attempted appropriation was unsuccessful, presumably because the account was not in funds.

  1. On 24 January 2012, the applicants requested the Casino, Liquor and Gaming Control Authority to transfer ownership of the hotel business to A J Holdings Pty Limited, and the licence to its director, Mr Sidgreaves, pursuant to section 61 of the Liquor Act 2007. That application was granted, and the licence transferred, on 30 January 2012. It is common ground that, from 4 January 2012 (or perhaps from 2 January 2012, though nothing turns on the difference) to 29 January 2012, the applicants were deemed to be the licensees of the hotel by operation of section 61(3) of the Liquor Act 2007.

  1. On or about 20 January 2012, the Office of State Revenue informed Mr Sidgreaves that he was liable to pay the tax, as he had been the licensee when the tax became payable on 23 January 2012. He objected, and his objection was allowed on 20 April 2012.

Decisions under review

  1. By letter dated 1 May 2012, the Chief Commissioner notified the second applicant, Cumedo Pty Limited, that it was liable to pay the Quarterly Instalment, as it had been a licensee of the hotel as at 23 January 2012. By letter dated 4 May 2012, the Chief Commissioner notified the first applicant A J Holdings Pty Limited, that it was similarly liable, as it, too, had held the licence as at 23 January 2012.

  1. The applicants objected to the decisions notified on 1 and 4 May 2012, on the basis that section 7(4) of the Gaming Machine Tax Act 2001 ("the Act") fixed the tax liability on the licensee as at the date when the Quarterly Instalment was "due". They asserted that it became "due" (in the sense of "owing") on 1 January 2012 - the day after the relevant quarter expired - when Mr Parrott was still the licensee. In the event that their objections were disallowed, they sought apportionment of the Quarterly Instalment between hoteliers, in the exercise of discretion pursuant to section 11(1)(a) of the Act.

  1. On 3 September 2012, the Chief Commissioner disallowed their objections, on the basis that the Quarterly Instalment became "due" (in the sense of "payable") on 23 January 2012 when they were the licensees. He declined to apportion the instalment as between them and Mr Parrott, because he considered that his power of apportionment was excluded by operation of section 11(2), which provided:

"Subsection (1)(a) does not affect the operation of section 7(4)."

  1. The applicants now seek review of the decisions notified on 1 and 4 May 2012, pursuant to section 96 of the Taxation Administration Act 1996. It is common ground that the Tribunal enjoys jurisdiction to review those decisions.

Apportionment

  1. In the event that the decisions under review are affirmed, the applicants seek an apportionment of their tax liability as between them and Mr Parrott. Should the Tribunal find it has power to review the Chief Commissioner's decision to decline apportionment, he requests that it be remitted to him for further consideration before it is reviewed. The applicants consent to that course.

  1. The Tribunal's power to review revenue decisions is confined to decisions to which objection has been taken and disallowed: section 99, Taxation Administration Act 1996. The power to remit a decision for further consideration is confined to decisions under review: section 101(1)(d), Taxation Administration Act 1996; section 65(1), Administrative Decisions Tribunal Act 1977. There is no evidence that objection was taken to the decision to decline apportionment. In the absence of such an objection and its disallowance, the Tribunal lacks power to review it.

  1. There is, however, nothing to prevent the Chief Commissioner from considering afresh the application for apportionment on completion of these proceedings, giving the applicants an opportunity to make proper objection, particularly if the applicants provide further evidence or submissions in support of that application. That course seems appropriate, having regard both to the complex nature of the decision making process - in which it was first assumed that Mr Parrott was liable to pay the Quarterly Instalment, then determined that Mr Sidgreaves was liable, and then determined that the applicants were liable instead - and to the fact that the applicants have conducted themselves in these proceedings on the basis that the decision to decline apportionment was reviewable, apparently without objection by the Chief Commissioner. In considering any potential apportionment of liability between the applicants and Mr Parrott, it would be proper to take into account any submissions which Mr Parrott might care to make.

Submissions

  1. The parties have filed written submissions, and have made detailed oral submissions at the hearing. These submissions have been taken into account. As their detail may be found in the filed documents, and in transcript, it is unnecessary to repeat it here. What follows is a brief summary of the main points only.

  1. Section 7(4) of the Gaming Machine Tax Act 2001 ("the Act") provides that "the liability to pay [quarterly instalments of gaming machine tax] lies with the hotelier who holds the relevant hotel licence at the time the instalment is due". "Hotelier" is defined to mean the holder of a hotel licence: section 3, Gaming Machine Tax Act 2001; section 4, Liquor Act 2007.

  1. As indicated, for the purposes of these proceedings, the parties agree that Mr Parrott was the licensee as at 31 December 2011, and that the applicants were the licensees from 4 January 2012 (or possibly 2 January 2012 - the precise date is not material) and 30 January 2012, when Mr Sidgreaves became the licensee.

  1. The applicants submit that quarterly instalments of gaming machine tax are "due" on the last day of each relevant quarter. For that proposition, they rely on the decision of this Tribunal in Papacostas v Chief Commissioner of State Revenue [2006] NSWADT 57, considered below. The last day of the relevant quarter was 31 December 2011, when Mr Parrott was still the licensee. They submit that any other interpretation would be unlikely to reflect the intention of parliament, as the Quarterly Instalment was calculated by reference to profits derived from gaming machines during a period in which they were neither in possession of the hotel, nor in receipt of those profits. They also rely on the statutory context as an aid to construction, pointing out that the word "payable" is used elsewhere in the legislation and not in section 7(4), and that the phrase "became due" is used in section 6(3).

  1. The Chief Commissioner submits that the word "due" in section 7(4) of the Act means "due and payable", as distinct from "owing". Section 7(3), he says, obliges the relevant hotelier to "deposit the amount payable in a bank or financial institution" for appropriation by the Chief Commissioner "within 21 days after the end of each instalment period" - in this case, by 23 January 2012, as 21 January fell on a weekend. The person liable to pay it is the person or persons who held the hotel licence on that date. As at 23 January 2012, the licence was held by the applicants.

  1. If "due" is construed as meaning "owing", the Chief Commissioner says that a quarterly instalment remains "owing" from the last day of the relevant quarter until it is paid. In this case, the Quarterly Instalment remained "owing" throughout the period in which the applicants were licensees. It follows, he submits, that they are liable to pay the Quarterly Instalment. The same result follows, he says, if the tax did not become "owing" until the Quarterly Instalment was invoiced on 16 January 2012.

  1. In reply, the applicants say this would produce absurdity, because a licence can change hands many times while the tax remains unpaid. The intention of the legislation, they submit, is to provide certainty in identifying the taxpayer. Construing the phrase "is due" to mean a period of time would produce a result contrary to the likely intention of parliament. Parliament's intention is best achieved by construing the phrase to mean a single date - namely, the last day of the relevant quarter, when Mr Parrott was the licensee.

Issue for determination

  1. The issue for determination is the date or dates on which the Quarterly Instalment was "due" within the meaning of section 7(4) of the Act.

Legislation

  1. Section 6 of the Act provides as follows.

Tax on gaming machines
(1) A tax is payable on profits from gaming machines kept in a hotel or on the premises of a registered club.
(2) The tax is payable by the hotelier or registered club concerned.
(3) In the event of a tax default (within the meaning of the Taxation Administration Act 1996) in respect of an amount of tax for which a hotelier is liable:
(a) the hotelier, and
(b) any person who, at the time the amount became due, was directly interested in the business, or the profits of the business, carried on under the hotel licence,
are jointly and severally liable to pay the amount concerned, and section 45 of that Act applies accordingly.

  1. At all relevant times, section 7 of the Act provided as follows.

Payment by instalments
(1) For the purposes of this Act:
(a) each tax year of a hotelier is divided into 4 periods of 3 months commencing on 1 July, 1 October, 1 January and 1 April, and
(b) each tax year of a registered club is divided into 4 periods of 3 months commencing on 1 September, 1 December, 1 March and 1 June.
(2) Quarterly instalments of tax are payable by a hotelier or registered club to the Chief Commissioner within 21 days after the end of each instalment period.
(3) A hotelier or registered club must:
(a) before the end of each such 21-day period, deposit the amount payable in a bank or financial institution, and
(b) make such arrangements with the Chief Commissioner as enable the Chief Commissioner to access or appropriate that amount (such as by way of direct debit from the account of the hotelier or registered club concerned).
Maximum penalty: 20 penalty units.
(4) In the case of hoteliers, the liability to pay such an instalment lies with the hotelier who holds the relevant hotel licence at the time the instalment is due.

  1. Section 11 provides as follows.

11 Apportionment of liability for tax in certain circumstances
(1) The Chief Commissioner may, in such manner as the Chief Commissioner considers appropriate:
(a) apportion the liability for tax as between hoteliers:
(i) in any case where there has been a change in the ownership of a hotel licence, or
(ii) in such other circumstances as the Chief Commissioner considers appropriate, and
(b) apportion the liability for tax as between registered clubs:
(i) in the event of an amalgamation of a registered club as referred to in the Registered Clubs Act 1976, or
(ii) in such other circumstances as the Chief Commissioner considers appropriate.
(2) Subsection (1) (a) does not affect the operation of section 7 (4).

Consideration

  1. The meaning of the word "due" in section 7(4) was considered by the Tribunal in Papacostas. Mr Papacostas had become the licensee of the Erskineville Hotel on 20 August 2004. He paid gaming machine tax in respect of the entire quarter from 1 July to 31 September 2004. He asked the Chief Commissioner to exercise his discretion pursuant to section 11(1)(a) of the Act, by apportioning the liability between him and the previous licensee, Mr Hagan, and refunding the amount referable to the period when the licence was held by Mr Hagan. The Chief Commissioner declined.

  1. On review, the Tribunal affirmed the Chief Commissioner's decision. It found that the power to apportion was not available where section 7(4) applied to fix a particular licensee with liability for a quarterly instalment, and that section 7(4) operated so as to fix Mr Papacostas with that liability. Judicial Member Block found [at 18-20]:

18 The effect of section 11(1) (a) is negatived to a considerable extent by section 11(2) which provides that section 11(1) (a) does not affect the operation of section 7(4). Put in other words section 11(1) (a) does not operate where section 7(4) does. This is the clear meaning of the words of the relevant provisions and no question of ambiguity arises. It is necessary then to consider what meaning is to be attributed to section 11(1)(a); as a matter of statutory interpretation a court (and this Tribunal) will endeavour to give a statutory provision meaning on the basis that it is not likely that the parliament included a provision which is entirely ineffective. The second reading speech in respect of the bill before it became the Act does not furnish any assistance. Section 11 was inserted at the committee stage and without opposition; the Hon Greg Pearce noted "the Opposition does not oppose this set of miscellaneous and other amendments to the bill".
19 "As a general principle, the courts have pointed out that they are not at liberty to consider any word or sentence as superfluous or insignificant. All words must prima face be given some meaning and effect." This sentence appears in clause 2.22 of Statutory Interpretation in Australia 5th edition by Pearce and Geddes; see also the cases referred to in that clause. Clause 2.2 then goes on to state that the principle is more compelling "if the word in question has been added by amendment. Nor can a court declare a section of an Act void for uncertainty no matter how difficult it is to interpret. These matters are however subject to the overriding consideration that it may be impossible to give a full consideration to every word.... In such cases the duty of the court is to give the words the construction "that provides the greatest harmony and the least inconsistency". Clause 2.2 contains references to a number of cases; a reference to Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490 will suffice.
20 Ms Baker on behalf of the Respondent contended that it is possible to reconcile sections 7 and 11 of the Act and in particular by reference to the concept of recovery of the tax. If the Respondent had been unable within 21 days of the due date for payment, to recover the tax from the Applicant in respect of the tax period, because the Applicant, was insolvent or otherwise unable to make payment, he, the Respondent would have been entitled to use his discretionary powers under section 11(1)(a) so as to recover part of the tax from a prior hotelier. There is (indirect) support for this contention in section 6 of the Act which provides that in certain circumstances the Respondent can recover the tax from someone other than the hotelier, and in particular a person who was "directly interested in the business or the profits of the business carried on under the hotelier's licence." As to what is meant by this provision may not always be altogether clear given that the Applicant was the hotelier. Section 6 is not directly relevant; it applies when there is a tax default as referred to in the Taxation Administration Act 1996 and empowers the Respondent in those circumstances to seek recovery from a person closely connected with the business of the hotelier concerned. This leaves room for and supports the contention advanced by the Respondent and pursuant to which the Respondent has the power to use section 11(1)(a) to recover from a hotelier who is not the hotelier responsible under section 7(4), and where the latter cannot make payment. The Respondent's contention does indeed appear to offer a sensible solution as to the function of section 11(1) (a); the Act is after all a revenue statute and provisions which aid in the collection of the revenue are to be expected.
21 .... Where section 7(4) applies section 11(1) (a) does not by force of section 11(2); there is in other words in these circumstances no discretionary power available to the Respondent.

  1. The Tribunal was there concerned with the power to apportion liability pursuant to section 11(1)(a). In this case, the decisions under review are decisions as to liability only, and do not include any decision as to apportionment.

  1. In finding that Mr Papacostas was liable to pay the instalment by operation of section 7(4), the learned Judicial Member observed [at 9-10]:

9 The scheme of the Act is to impose the tax in respect of instalment periods (and which are quarterly periods) by reference to the gambling profits derived during those periods. In this matter the relevant instalment period is the tax period. Section 7(4) of the Act provides that the person liable is the hotelier who holds the relevant hotelier's licence at the time when the instalment became due. The tax falls due on the last day of the instalment period, and is payable within 21 days after the end of the instalment period. That tax is due on the last day of an instalment period (or in other words in arrears) is logical given that the tax is calculated by reference to the profits derived during that instalment period.
10 In this case then, and in respect of the tax period, the hotelier on the last day of the tax period was the Applicant; prior to 20 August 2004 the hotelier was Hagan.

  1. And at 16:

16 Under section 7 (4) of the Act the person who is liable for the tax is the person who is the hotelier on the last day of the instalment period.

  1. The Chief Commissioner submits that the facts of Papacostas are distinguishable. In that case, the identity of the licensee changed during the relevant quarter, and not (as here) after its expiry. The learned judicial member was not asked to consider which of two licensees was liable to pay the quarterly instalment in circumstances where the licence had changed hands during the 21-day period following expiry of the relevant quarter, as in this case. His attention was not drawn to authorities bearing on that issue, and he was not required to consider them. These submissions appear to me to have force.

  1. The meaning of the word "due" was famously considered by the High Court in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1. In that case, a taxpayer had a number of term deposits with a bank. After assessing him to income tax, the Commissioner of Taxation served on the bank notices pursuant to section 218 of the Income Tax Assessment Act 1936, requiring the bank to pay to him "the amount due by the taxpayer in respect of any tax", from any money "due or accruing or which might become due" by the bank to the taxpayer. The High Court was asked to consider the meaning of the word "due" in that section. It found that the ordinary meaning of "due" was "owing" as distinct from "due and payable", but that it could mean either, depending on context. The presumption that the same word was intended to have the same meaning when used in different parts of a statutory provision, the Court found, must yield to context. Gibbs CJ found [at paras 3-6 - emphasis added]:

3. The first submission made before us on behalf of the appellants was that at the time when the notices were given no amount was "due" by Mr Clyne in respect of any tax, within the meaning of s. 218. It is clear that no tax was payable at that time; by virtue of s. 204 of the Act, the tax was not payable before 8 August. It was submitted on behalf of the appellants that "due" in s. 218(1)(i) must mean "due and payable", first, because under the Act tax cannot be due before it is payable, secondly, because "due" is used elsewhere in s. 218 in the sense of "payable" and it should be assumed to have the same meaning throughout the section and, finally, because one should not impute to the Parliament an intention that the Commissioner should have power to collect tax from persons who owe money to the taxpayer before the tax is payable by the taxpayer himself. (at p8)
4. The word "due" is ambiguous; it can mean owing, although not payable until some future date, or it can mean presently payable. The meaning of the word must be determined by the context. In ss. 204, 205, 206, 207 and 208 of the Act, which deal with the payment of tax, and in s. 170(2), (3), (4) and (6), which deal with the amendment of assessments, the expression "due and payable" is used, and although the expression appears on any view to be tautological, the change of words appears to be intended to indicate a change of meaning, so that "due" in that phrase must mean "owing". In Gordon Edgell and Sons Pty. Ltd. v. Federal Commissioner of Taxation (1949) 9 ATD 43, at p 46 , Williams J. said that the effect of ss. 204 and 208 is to make the debt for tax due at the same time as it is payable. He went on to say (1949) 9 ATD, at p 46:-
"Service of notice of the assessment does not therefore make the taxpayer legally liable to pay the tax although its payment rests in the future. It is not a case of debitum in praesenti solvendum in futuro. But when the respondent makes an assessment of the amount of the tax and serves notice of the assessment, the taxpayer is bound to pay the tax within the thirty days or incur the penalty provided by s. 207. The Act therefore plainly contemplates and intends that a taxpayer shall pay the tax within the thirty days. I am of opinion that a taxpayer is not taxed until he is served with the notice of assessment . . .".
With all respect, not all of this reasoning can be accepted. The tax is imposed by the relevant Income Tax Act, not by the Income Tax Assessment Act, and in s. 6(1) of the Act "income tax" or "tax" is accordingly defined as "income tax . . . imposed as such by any Act, as assessed under the Income Tax Assessment Act 1936, or under that Act as amended at any time." Section 17 of the Act provides that, subject to the Act, income tax at the rates declared by the Parliament is levied and shall be paid upon the taxable income derived during the year of income by any person. These provisions suggest that the tax is due, in the sense of owing, once the taxable income during a year of income has been derived because there then arises a legal liability to pay it, notwithstanding that the extent of the liability remains to be ascertained and that payment is to be made in the future. That this is so, at least for certain purposes, is shown by the decision in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd. [1925] HCA 20; ; (1925) 36 CLR 98, esp at pp 102, 104, 116, 118 and Re Mendonca; Ex parte Federal Commissioner of Taxation (1969) 15 FLR 256, esp at pp 259-260 , and by statements in the judgments of Knox C.J. in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd. [1926] HCA 17; (1926) 38 CLR 63, at p 66 ; Latham C.J. in Aitken v. Federal Commissioner of Taxation [1936] HCA 53; (1936) 56 CLR 491, at p 497 ; and Kitto and Taylor JJ. (dissenting) in Deputy Federal Commissioner of Taxation v. Brown [1958] HCA 2; [1958] HCA 2; (1958) 100 CLR 32, at pp 58, 63-64 . On the other hand it has been said that tax is not due until it is assessed (see George v. Federal Commissioner of Taxation [1952] HCA 21; (1952) 86 CLR 183, at p 207 and per Dixon C.J. in Deputy Federal Commissioner of Taxation v. Brown (1958) 100 CLR, at p 40 ). This may be the correct view for most practical purposes. Certainly a notice under s. 218 could not be given before the taxpayer had been assessed, for until that time "the amount due by the taxpayer" could not be ascertained. However, all the authorities to which I have referred are opposed to the view which Williams J. expressed in Gordon Edgell and Sons Pty. Ltd. v. Federal Commissioner of Taxation and seems to have repeated in Deputy Federal Commissioner of Taxation v. Brown (1958) 100 CLR at p 50 , that tax becomes due only when it is payable. At the latest when tax is assessed it becomes a debt due to the Crown although it is not payable until the later date specified in the notice of assessment. For these reasons when the word "due" is used in the Act, without the accompanying words "and payable", it will prima facie mean simply owing. This distinction between "due" and "payable" is clearly drawn in s. 255(1), which requires a person in receipt or control of money belonging to a non-resident to "pay the tax due and payable by the non-resident" (par. (a)) and "to retain . . . so much as is sufficient to pay the tax which is or will become due by the non-resident" (par. (b)) (see also s. 254(d)). (at p10)
5. The question then is whether a notice can be given under s. 218 in respect of a taxpayer whose tax is due but not payable. There can be no doubt that the word "due", where it appears in par. (a) of s. 218(1), and in the words "forthwith upon the money becoming due" and "not being a time before the money becomes due" in that sub-section, means "presently payable". This is clearly indicated by the fact that par. (a) refers not only to money due, but also to money "accruing", that is, falling due as a result of natural increase, e.g., by way of interest. If "due" simply meant "owing", it would include moneys accruing, and that word would add nothing to the meaning of the paragraph. Paragraph (a) obviously refers to moneys which are, will be, or may be payable. Moreover it would be drastic, and generally speaking unconscionable, to require a third party to pay to the Commissioner money which was owed to the taxpayer but which was not yet payable to him, and doubts might be raised as to the constitutional validity of such a provision. In the event of any ambiguity, s. 218 should be construed to avoid the unjust result that a third party should be required to pay to the Commissioner moneys that were not yet payable to the taxpayer. For all these reasons "due" in the passages mentioned must mean "payable". (at p10)
6. It is then understandably argued that the same meaning should be attached to the word "due" where it appears elsewhere in the section. No doubt there is a presumption that where the same word is used on more than one occasion in a section it is intended to have the same meaning in each case, but this is not a presumption of very much weight; there is no rigid rule; it all depends on the context: see McGraw-Hinds (Aust.) Pty. Ltd. v. Smith [1979] HCA 19; (1979) 144 CLR 633, at p 643 . The context in which "due" appears in par. (a) shows that where reference is made to money "due" by the third party to the taxpayer, what is meant is "payable". No similar context controls the meaning of "due" in the phrase "the amount due by the taxpayer". The word should therefore be given the meaning which it consistently bears in the Act since the context does not require a departure from that meaning. It is true that it is natural to recoil from a construction that will permit the Commissioner to recover the amount of tax from the third party before it is payable by the taxpayer to the Commissioner, although having regard to the provisions of s. 204 the period of acceleration would not be likely to exceed 30 days. However the section is obviously designed to confer exceptional powers on the Commissioner to facilitate the collection of tax, particularly in a case where the taxpayer might otherwise escape payment, and I can see no justification for departing from the ordinary meaning which the word "due" bears in the Act. I should add that in the present case, although the notice was given before the date on which the tax was payable, the times specified by the notice as those by which payment was to be made were after that date. (at p11)

  1. Mason J (as he then was), with whom Aickin and Wilson JJ agreed, said [at paras 8-18]:

8. Critical to the second appellant's first ground for relief is the meaning of the expression "the amount due by the taxpayer" in par. (i) of sub-s. (1). Does "due" mean "due" in the sense of "owing" or does it mean "due and payable"? McLelland J. [at first instance] held that it meant "due and payable" with the result that he did not proceed to an examination of the second ground for relief. He made a declaration in favour of the second appellant (1979) 10 ATR 249; 79 ATC 4,515 . (at p14)
9. The Court of Appeal came to a different conclusion and allowed the appeal. The members of the Court were unanimous in thinking that "the amount due by the taxpayer" meant "due" not "due and payable". They further held that the consequence of the giving of a valid notice under s. 218 was that it could not be defeated by an assignment of the taxpayer of his right to the moneys, the subject of the notice, before the moneys became due and payable to the taxpayer (1980) 2 NSWLR 130; 43 FLR 316; 32 ALR 280; 11 ATR 103; 80 ATC 4,415. . (at p15)
10. It is common ground between the parties that Isaacs J. was right in Mack v. Commissioner of Stamp Duties (N.S.W.) [1920] HCA 76; (1920) 28 CLR 373, at p 382 when he said:
"'Due' is sometimes used in the sense of 'payable'; that, however, is where the context requires it. But, as Mellish L.J. said with reference to the phrase 'debts due', in Ex parte Kemp; In re Fastnedge (1874) L.R. 9 Ch. 383, at p. 387. , 'prima facie' and if there be nothing in the context to give them a different construction, they would include all sums certain which any person is legally liable to pay, whether such sums had become actually payable or not."
It is also common ground that the word "due" in s. 218(1)(a) in the expression "by whom any money is due or accruing or may become due" means "due and payable". This is because a debt "accruing" signifies a debt which is due but not immediately payable - see the garnishee cases Webb v. Stenton (1883) 11 QBD 518 and Bagley v. Winsome and National Provincial Bank Ltd. (1952) 2 QB 236, at p 240 - and it cannot be that the Commissioner can by notice require a debtor of a taxpayer to pay the money which he owes to the taxpayer before the debt, as between the debtor and the taxpayer, has become payable. It is evident that par. (a) describes a descending order of liabilities. (at p15)
11. The appellants then argue that once this is established to be the meaning of "due" in par. (a) it should be accorded the same meaning in par. (i) on the footing that there is a presumption that in a statute the same word is always used with the same meaning, especially when it is used more than once in the same section. However, it is now settled that presumption readily yields to the context and, as Gibbs J. noted in McGraw-Hinds (Aust.) Pty. Ltd. v. Smith [1979] HCA 19; (1979) 144 CLR 633, at p 643 : "It is well recognized that a word may be used in two different senses in the same section of the one Act". There are statements to the effect that the presumption has little force in Income Tax Acts - see Martin v. Lowry (1926) 1 KB 550, at p 561 ; Littlewoods Mail Order Stores Ltd. v. Inland Revenue Commissioners (1963) AC 135, at p 150 . As these statements appear to be based on the fact that Income Tax Acts deal with a wide variety of topics, they have little value when we are examining the possibility that a word is used in different senses in one section of such an Act. (at p16)
12. There are, however, other considerations which indicate that the meaning of "due" in par. (a) should not be automatically assigned to the word in par. (i). The meaning which the word has in the first paragraph is very much the product of the special context in which it is there found. There is no similar context in par. (i). Par. (a) is referring to the liability on the part of the addressee of the notice to the taxpayer whereas par. (i) refers to the liability of the taxpayer in respect of tax to the Commissioner. (at p16)
13. Then we find that the expression "due and payable" is used in other sections in Pt VI, see ss. 204, 205, 206, 207 and 208. This in itself suggests that the word "due" when used in isolation bears its prima facie meaning unless there is a constraining context. (at p16)
14. A circumstance which lends some support to this the opposite view is the consequence discussed later in this judgment, that if "due" does not mean "due and payable" then the Commissioner by giving a s. 218 notice can require payment of a debt owing to the taxpayer which, but for the notice, would not become payable to him by reason of the supervening rights of a secured creditor, e.g. the crystallization of a floating charge before the debt becomes payable. However, I do not regard this consequence as sufficiently strong to outweigh other factors indicating that "due" in par. (i) bears its prima facie meaning. (at p16)
15. This view did not commend itself to the primary judge who understandably placed great weight on s. 204. This section makes income tax assessed
" . . . due and payable . . . on the date specified in the notice as the date on which the tax is due and payable, not being less than thirty days after the service of the notice, or, if no date is so specified, on the thirtieth day after the service of the notice."
His Honour thought the natural inference to be drawn from the provision was that the tax assessed became due and became payable at one and the same time, that before the date fixed by the section the tax was neither due nor payable. This accords with what Williams J. said in Gordon Edgell & Sons Pty. Ltd. v. Federal Commissioner of Taxation (1949) 9 ATD 43, at p 46 , that: "The effect of ss. 204 and 208 is to make the debt become due at the same time as it is payable." (at p16)
16. However the correct view in my opinion is that income tax is due when it is assessed and notice is served of that assessment and that the tax does not become payable before the date fixed by s. 204. Dixon C.J., McTiernan, Williams, Webb and Fullagar JJ. in George v. Federal Commissioner of Taxation [1952] HCA 21; (1952) 86 CLR 183, at p 207 said that "tax is only due after it is 'assessed' (see, for example, s. 204)". I recognize that on other occasions members of this Court have said that "tax is a debt due and owing, although not payable, notwithstanding that no assessment has been made", in the words of Gibbs J. in Re Mendonca; Ex parte Federal Commissioner of Taxation (1969) 15 FLR 256, at p 259 . This approach can be traced back to the majority decision of this Court in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd. (Mortimer Kelly's Case) [1925] HCA 20; (1925) 36 CLR 98, esp at pp 105, 116 and 118 . I think that the decision is to be explained on the footing that it was held that a debt for income tax not assessed until after the deceased's death was a "debt due by the deceased" for the purposes of Acts imposing death and probate duties. The decision was so explained by Taylor J. (dissenting) in Deputy Federal Commissioner of Taxation v. Brown [1958] HCA 2; [1958] HCA 2; (1958) 100 CLR 32, at pp 63-64 and this explanation derives support from the judgments of Higgins and Starke JJ., if not from the judgment of the third member of the majority, Knox C.J., in Mortimer Kelly's Case. (at p17)
17. Section 206 which enables the Commissioner to grant an extension of time for payment or to permit payment to be made by instalments and provides that the tax shall be due and payable accordingly, is more easily accommodated to the view that tax is due no later than the time when the notice of assessment is served on the taxpayer than to the appellant's interpretation which makes tax due when it becomes payable. (at p17)
18. For all these reasons I consider that "due" in par. (i) of s. 218 means "due" in its primary sense, not "due and payable". (at p17)

  1. In these proceedings, neither party argued that the Quarterly Instalment did not become "due" until the decisions of 1 and 4 May 2012.

  1. Applying the reasoning in Clyne, the word "due" in section 7(4) is to be construed as having its ordinary meaning of "owing" unless the context otherwise requires.

  1. Before examining that context, it is appropriate to have regard also to section 33 of the Interpretation Act 1987, which provides:

In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.

  1. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490, the Court of Appeal affirmed the need to have regard to the statutory context, its purpose and policy at [69]:

"The primary objective of statutory construction is to construe the relevant provisions so that it is consistent with the language and purpose of all the provisions of the statute: see Taylor v Public Service Board (NSW) [1976] HCA 36; (1976) 137 CLR 208 at 213 per Barwick CJ. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole': Cooper Brooks (Wollongong) Pty Limited v FCT [1981] HCA 26; (1981) 147 CLR 297 at 320 per Mason and Wilson JJ. See also South West Water Authority v Rumbles [1985] AC 609 at 617 per Lord Scarmon, 'In the context of the legislation read as a whole'. Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; (1955) 92 CLR 390 at 397, Dixon CJ pointed out that 'the context, the general purpose and policy of the provision and its consistency in fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed."

  1. The Gaming Machine Tax Act 2001 is a revenue statute whose purpose is to regulate and facilitate the assessment of tax on profits derived from gaming machines, and the payment of that tax by hoteliers and registered clubs.

  1. Section 6(1) of the Act identifies the thing by reference to which the tax is to be assessed - namely, profits from gaming machines kept on specified premises. Section 6(2) identifies the persons liable to pay the tax - namely, hoteliers (defined to include licensees) and registered clubs upon whose premises the machines are kept.

  1. Section 7 prescribes when and how gaming machine tax is to be paid. Subsection 7(1) divides the tax year of hoteliers into four quarters, commencing on 1 July in each year. For registered clubs, the quarters commence on 1 September. Its purpose is to facilitate the assessment of gaming machine tax in respect of the profits derived in each quarter, as distinct from annual assessments of tax on profits derived over the course of a year. Where tax is overpaid during a tax year, section 10 provides for reimbursement and re-crediting. Subsection 7(2) identifies the date on which each "quarterly instalment" is "payable" - that is, "within 21 days after the end of each instalment period". The phrase, "each instalment period" is a reference to the quarters identified in the previous subsection. Subsection 7(3) describes the method by which payment is to be made. The taxpayer is to credit the amount of quarterly tax to a bank account, and enable the Chief Commissioner to appropriate it, within the 21 day period described by subsection 7(2).

  1. Subsections 6(3) and 7(4) relate exclusively to hoteliers. All the remaining provisions of sections 6 and 7 apply to both hoteliers and registered clubs. Subsection 6(3) provides for the recovery of tax from both the hotelier concerned and persons interested, directly or indirectly, in the business of the hotel, where there is a default in payment of the tax. Its purpose is to ensure that the interests of the revenue are not defeated if a licensee is unwilling or unable to pay an instalment, or cannot be found.

  1. The purpose of subsection 7(4) is to identify the licensee who is liable to pay each quarterly instalment, having regard to the fact that different persons can hold the licence in respect of a particular hotel at different times. Its purpose is to identify with reasonable certainty the person who will be liable to pay the tax, so that the CMS licensee knows who to invoice for each quarter, the Chief Commissioner knows who to assess, and licensees can identify their potential tax liability, so they can make appropriate contractual arrangements in respect of it if they wish, such as providing for indemnities.

  1. Section 11(1)(a) empowers the Chief Commissioner to apportion the tax payable in respect of a year as between hoteliers, where there has been a change in hotelier. However, subsection 11(2) provides, "Subsection (1)(a) does not affect the operation of section 7 (4)."

  1. It follows that neither the power to apportion, nor any apportionment made or to be made, alters the effect of section 7(4) - namely, that the person liable to pay a quarterly instalment is the person who held the hotel licence when the instalment "is due". Whether subsection 11(2) also excludes the power of apportionment where section 7(4) operates is an issue not requiring determination in this case.

  1. The purpose of section 7(4) is to provide certainty as to which of a number of different licensees is liable to pay a quarterly instalment, at least in circumstances where the identity of the licensee has changed, and perhaps in other circumstances as well. Where the identity of a licensee has changed after the relevant quarter, as here, that purpose is better achieved by fixing liability by reference to a particular date, such as the date on which a quarterly instalment becomes payable, than to a period of time during which any number of persons might have held the licence, such as the period during which the instalment remains owing.

  1. The former interpretation - which fixes liability by reference to a single date - results in identifying a single person as being liable to pay the quarterly instalment, except where more than one person held or is deemed to have held the licence on the relevant date, or the licence was transferred on that date. In either of those two cases, the Commissioner enjoys power to apportion the liability, even if section 11(2) excludes the power of apportionment in other circumstances, as was found in Papacostas.

  1. The latter interpretation - which fixes liability by reference to a period of time - might conceivably benefit the revenue by spreading the tax liability among a number of persons, thus making recovery more likely, but there is no indication in the Act that the legislature had this in mind, and it seems inherently unlikely. It would result in the consumption of greater administrative resources, requiring the Chief Commissioner and the CMS licensee to identify each licensee during what could be an extended period, and make demand on each for payment. It would be likely to inspire applications for apportionment between the licensees concerned, requiring determination and exposing the revenue to the risk of litigation, notwithstanding the decision in Papacostas. Such an interpretation would also be likely to discourage people from taking up hotel licences for as long as any quarterly instalment remained unpaid, with adverse consequences to the revenue.

  1. Adopting a purposive interpretation, it is more likely that the words "is due" were intended to define the date on which the instalment became payable, rather than the period during which it remained owing.

  1. Such a result is consistent with a contextual analysis. The word "due" is used both in section 6(3)(b) and section 7(4). In section 6(3) it appears in the phrase "any person who, at the time the amount became due, was directly interested in the business ...". The purpose of that provision is to broaden the tax liability where an hotelier has defaulted in payment of a quarterly instalment, to include persons interested in the business. The ordinary meaning of the phrase "at the time the amount became due" makes it clear that parliament intended by this to indicate a particular date, rather than a period.

  1. There is a difference, of course, between the phrases "became due" in section 6(3) and "is due" in section 7(4). However, the difference is small, and may or may not reflect a different intent. It is more likely that parliament intended the word "due" to bear the same meaning when used in both places, because the fixing of liability by reference to a single a single date, rather than a range of dates, provides certainty of outcome, and administrative efficiency in recovery of the tax.

  1. The applicant submits that parliament's use of the word "payable" in section 6(2) suggests that the word "due" in section 7(4) has a different meaning. Section 6(2) provides that, "Quarterly instalments of tax are payable by a hotelier ... within 21 days after the end of each instalment period." Its effect is to oblige hoteliers to pay the tax on the day that falls 21 days are the end of the relevant instalment period. They may, if they wish, pay the tax beforehand, but are not obliged to do so. The tax is "payable" on the 21st day, by the method set forth in section 6(3). Perhaps parliament's intention might have been better expressed in section 7(4) by using the word "payable" rather than "due", but that intention may readily be ascertained from the purpose of the section. As the word "due" is inherently ambiguous (Clyne), such an interpretation is not necessarily inconsistent with use of the word "payable" in section 6(3).

  1. Construing section 7(4) having regard to its purpose and context, it is likely that the intention of parliament when using the phrase "is due" was to specify a single date rather than a range of dates. That makes it unlikely that "due" was used in its ordinary sense of "owing". It is more likely that it was intended to mean "payable" or "due and payable", consistently with the meaning of the phrase "at the time when the amount became due" in section 6(3)(b).

  1. The instalment cannot have been payable on 31 December 2011, or on any other date prior to the issue of the invoice by the CMS licensee on 16 January 2012, as the amount of the quarterly instalment was not ascertained until then. Section 7(3) makes it clear that the taxpayer has 21 days within which to credit a nominated account with the quarterly instalment. For that reason, the practice of the Chief Commissioner is to wait until the end of that period before conducting what is colloquially known as a "sweep" of accounts. In this case, it is common ground that the instalment was not payable until 23 January 2012, as 21 January fell on a weekend.

  1. For those reasons, I am satisfied that the Quarterly Instalment was "due", in the sense of "due and payable" on 23 January 2012. As the applicants held the licence of Tommy's Tavern on that date, they are liable to pay the Quarterly Instalment.

  1. Some of the parties' submissions were directed to the question as to whether the applicants had an interest in the business of Tommy's Tavern or its profits during the relevant quarter, in terms of section 6(3) of the Act. In view of the conclusions to which I have come, it has been unnecessary to consider that issue.

  1. I make the following orders.

1) The decision of the Chief Commissioner made on 1 May 2012, that Cumedo Pty Limited is liable to pay the quarterly instalment of gaming machine tax in respect of the period 1 October 2011 to 31 December 2011, is affirmed.

2) The decision of the Chief Commissioner made on 4 May 2012, that A J Holdings Pty Limited is liable to pay the quarterly instalment of gaming machine tax in respect of the period 1 October 2011 to 31 December 2011, is affirmed.

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Decision last updated: 09 July 2013

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