Re: BETTINA HOUSE OF FASHION PTY LTD (in Liquidation) and PETER JOHN DAVIDSON
And: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
No. VG432 of 1988
FED No. 116
Income Tax
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Jenkinson J.(1)
CATCHWORDS
Income Tax - Collection and recovery of tax - In bankruptcy and liquidation - Tax provision understated by Commissioner - Notice by Commissioner of correction - Effect.
Administrative Decisions (Judicial Review) Act 1977 - s.3(1)
Income Tax Assessment Act 1936 - ss. 8, 215, Part V
In re Armstrong Whitworth Securities Co. Ltd. (1947) Ch 673
James Smith & Sons (Norwood Ltd. v. Goodman (1936) 1 Ch 216
HEARING
MELBOURNE
#DATE 5:4:1989
Counsel for the Applicant : Mr. J.I. Fajgenbaum Q.C. and
Mr. H. Reicher
Counsel for the Respondent : Mr. C.M. Maxwell
Solicitors for the Applicant : Sly & Weigall
Solicitor for the Respondent : Australian Government Solicitor
JUDGE1
Application for an order of review.
The decision which is the subject of the application concerned the operation of s.215 of the Income Tax Assessment Act 1936 in relation to the applicants. The first applicant was at relevant times and is now in the course of being wound up and the second applicant was at material times and is now the liquidator of the first applicant.
Section 215 provides:
"(1) Every person (in this section called 'the trustee') -
(a) who is liquidator of any company which is being wound up; or
(b) who is receiver for any debenture holders, and has taken possession of any assets of a company; or
(c) who is agent for a non-resident and has been required by his principal to wind up the business or realise the assets of his principal, shall within 14 days after he has become liquidator, or after he has so taken possession of assets, or after he has been so required by his principal, give notice thereof to the Commissioner.
(2) The Commissioner shall as soon as practicable thereafter, notify to the trustee the amount which appears to the Commissioner to be sufficient to provide for any tax which then is or will thereafter become payable by the company or principal, as the case may be.
(3) Subject to sub-section (3B), if the trustee is a person of the kind referred to in paragraph (1)(a) or (b), the trustee -
(a) shall not, without the leave of the Commissioner, part with any of the assets of the company until the trustee has been so notified;
(b) shall set aside, out of the assets available for payment of ordinary debts of the company, assets to the value of an amount that bears to the value of the assets available for payment of ordinary debts of the company the same proportion as the amount notified by the Commissioner under sub-section (2) bears to the sum of -
(i) the amount notified by the Commissioner under sub-section (2);
(ii) any amount of prescribed tax that…
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- Case
- [1989] FCA 116
- Decision Date
CaseChat Overview and Summary
The court examined whether the notice of correction issued by the Commissioner was effective in altering the original assessment to include the understated tax. The court considered whether the Commissioner had the authority to make such corrections after the original assessment had been made, and if the notice complied with the relevant statutory requirements. The primary legal issue was whether the Commissioner's action was consistent with the legislative provisions governing tax assessments and corrections.
The court concluded that the Commissioner's notice of correction was valid and effective. The court found that the Commissioner had the statutory authority to issue the notice to correct an understated tax provision. The court held that the notice complied with the necessary legal requirements and was a valid means to adjust the original assessment. Therefore, the Commissioner could rely on the notice to recover the understated tax from the bankrupt taxpayer. The court's decision affirmed the Commissioner's right to correct an understated tax provision through a notice of correction, provided it was issued within the statutory timeframe and met the legal criteria.
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