Deputy Commissioner of Taxation v Aguer
[2024] ACTSC 236
•22 July 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Deputy Commissioner of Taxation v Aguer |
Citation: | [2024] ACTSC 236 |
Hearing Date: | 22 July 2024 |
Decision Date: | 22 July 2024 |
Before: | Elkaim AJ |
Decision: | (1) Judgment for the plaintiff in the sum of $546,985.46. (2) The defendant is to pay the plaintiff’s costs of the proceedings. (3) Judgment is not to be entered prior to 12 August 2024. |
Catchwords: | CIVIL LAW – JURISDICTION, PRACTICE AND PROCEDURE – Claim for various taxation monies – Income Tax Assessment Act 1997 (Cth) s 167 – Taxation Administration Act 1953 (Cth) pt IVC – income tax assessments not lodged – administrative penalties – penalisation of the defendant for failing to lodge income tax returns – judgment |
Legislation Cited: | Income Tax Assessment Act 1997 (Cth) s 167 |
Cases Cited: | Bennelong Medical Pty Ltd v Commissioner of Taxation (No 5) [2024] ACTSC 194 |
Parties: | Deputy Commissioner of Taxation ( Plaintiff) Ruben Aguer ( Defendant) |
Representation: | Counsel K Metlej ( Plaintiff) Self-represented ( Defendant) |
| Solicitors Craddock Murray Neumann Lawyers ( Plaintiff) Self-represented ( Defendant) | |
File Number: | SC 302 of 2023 |
ELKAIM AJ:
These proceedings were commenced with the filing of an originating claim and a statement of claim on 21 July 2023. The statement of claim seeks a judgment in the sum of $491,946.16 (but now updated to $546,985.46) flowing from the plaintiff’s rights to collect monies from taxpayers as stipulated in the Income Tax Assessment Act 1997 (Cth) (the ITAA) and the Taxation Administration Act 1953 (Cth) (the TAA).
I note that notwithstanding the approach taken in Bennelong Medical Pty Ltd v Commissioner of Taxation (No 5) [2024] ACTSC 194, the plaintiff had no qualms about jurisdiction in this matter. No doubt the plaintiff now agrees with Mossop J’s emphatic endorsement of the jurisdiction of this Court.
The manner of calculation, and the evidence generally, is contained in two affidavits of Mr Craig Mitchell, affirmed on 25 January 2024 and 19 July 2024 respectively. Mr Mitchell is “an Australian Public Servant employed in the debt section of the Australian Taxation Office”. In his second affidavit, Mr Mitchell explains how the amount has risen to $546,985.46, applicable as at 19 July 2024.
The plaintiff’s claim is essentially made up of three components. Each component is also attended by the addition of general interest charges.
The first component arises from income tax assessments for the years ending 30 June 2015, 30 June 2016, and 30 June 2017. These are assessments made by the plaintiff pursuant to s 167 of the ITAA. The assessments of tax liability for the above three years, together with general interest charges, total $282,798.80.
The second component is called an FTL Penalty, and relates to the penalisation of the taxpayer for failing to lodge income tax returns. Appropriate certificates of the penalty were issued under sch 1 of the TAA (Exhibit A, page 122). Together with interest, the total is $4,146.79.
The third component is administrative penalties, called Statement Penalties, again for the same three years, and again including interest. The total is $205,000.57. The relevant certificate can be found at page 123 of Exhibit A.
The defendant has filed two documents purporting to be defences, and has also relied on a letter to the Court, which is Exhibit 1. Suffice to say that nothing in either defence or in the letter can be used to defeat the plaintiff’s claims. This is not because there may not be substance in the matters raised, but rather because the taxation legislation effectively does not permit the challenges, at least at this stage of the proceedings.
The defendant may actually have some recourse to relief, but it is not through these proceedings, but rather through objections and utilisation of pt IVC of the TAA.
10. Rather than use my words to describe the legislation which precludes the resistance raised by the defendant, I will refer to the judgment of Bromwich J in Commissioner of Taxation v Ornelas [2016] FCA 457 (Ornelas), from [7]:
[7] On this application for summary judgment, I am able to be satisfied that Mr Ornelas has no reasonable prospect of successfully defending the claim at paragraph 1 of the originating application, for the following reasons:
(a) section 175 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and s 350-10(1) of Schedule 1 to the TAA (which is in substantially similar terms to the former s 177 of the ITAA 1936) and related provisions have the effect that production of a notice of assessment is conclusive evidence of the due making of the assessment and that the amounts and particulars in the notices of assessment are correct other than in proceedings under Part IVC of the TAA on a review or appeal relating to the assessment, which is not these proceedings;
(b) the production of a notice of assessment gives rise to a present debt, not one that arises in future if payment is not made by the date specified in the notice: Deputy Commissioner of Taxation (ACT) v Sharp (1988) 91 FLR 70; (1988) 19 ATR 1515 at 1519;
(c) in any event, the certificate under s 255-45 of the TAA establishes that each of the three notices of assessment, plus a notice of assessment of shortfall penalty for the financial years ended 30 June 2012 and 30 June 2013, plus a notice of assessment of penalty for failing to provide a document for the financial year ended 30 June 2014, all notices having been issued on 2 March 2016, were, as at 24 March 2016, debts due and payable to the Commonwealth by Mr Ornelas;
(d) none of the three jurisdictional error limitations on the various assessments taking effect according to their terms are applicable, in that it is not contended, and there is no basis for me to conclude, that any of them are tentative, provisional or the product of maladministration: Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32; (2008) 237 CLR 146 at 157 [24]-[25]; Roberts v Deputy Commissioner of Taxation [2013] FCA 1108; (2013) 228 FCR 280 at 285 [19]; see also Pratten v Commissioner of Taxation [2015] FCA 1357 at [24]-[26];
(e) the matters excluded from the challenge to the correctness of an assessment by way of objection, appeal to the Administrative Appeals Tribunal or this Court are not narrowly confined, this being in accordance with legislative policy to give a full opportunity to object by contesting liability in every respect;
(f) as this is not a Part IVC appeal, the presumptive effect of the provisions referred to above must be given full force and effect: see Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 621-622;
(g) no defence has been filed in these proceedings to the relief claimed in paragraph 1 of the originating application by Mr Ornelas and none has been foreshadowed, with it being conceded that he has no defence in this forum;
(h) the manifest and historical policy of tax legislation in Australia has been to give a taxpayer a full opportunity to object to an assessment and to contest liability, while at the same time to require that in proceedings for the recovery of the tax, the taxpayer will be bound by the assessment and will not be able to go behind it: McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 270;
(i) the overall legislative regime continues to be: “a clear policy in favour of the revenue against the taxpayer”: Trade World Enterprises Pty Ltd v Deputy Commissioner of Taxation [2006] VSCA 191; (2006) 64 ATR 316 at 322 [19];
(j) the legislation places the Commissioner in a “position of special advantage”: Clyne v Deputy Commissioner of Taxation (1983) 57 ALJR 673 at 674-675; and
(k) the Commissioner is generally free to pursue recovery proceedings despite the pendency of Part IVC proceedings: Southgate Investment Funds Ltd v Deputy Commissioner of Taxation [2013] FCAFC 10; (2013) 211 FCR 274 at 293-295 [77].
[8] Mr Ornelas has not commenced proceedings under Part IVC of the TAA but rather at this stage is only addressing the assessments by way of objection. But even if he had, or was foreshadowing, bringing proceedings under Part IVC, s 14ZZR of the TAA provides that:
“The fact that an appeal is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no appeal were pending.”
[9] Section 14ZZR is an important part of the ongoing legislative commitment to maintain the long-standing advantage of the Commissioner whereby the underlying basis for an assessment may be challenged, but in the meantime its enforcement ordinarily may not. If the taxpayer ultimately succeeds, then the remedy lies in reimbursement, and any other remedies that might arise, not in preventing recovery pending that outcome.
[10] The overall effect of the legislation and case law is that Mr Ornelas does not have any means in these proceedings, legal or factual, to resist judgment. If this matter had been listed for trial rather than summary judgment, there is no room to doubt that the Commissioner would have succeeded because of the effect of the legislative provisions I have already referred to.
11. The sections referred to by Bromwich J are the same as, or the updated equivalent of, the relevant sections in the present matter. Unlike the case before Bromwich J, this matter is not an application for summary judgment, but rather an apparent full hearing on the merits. Unfortunately, there are no merits in the defence, so that the approach taken by Bromwich J is equally applicable here.
12. Bearing in mind then that, as in Ornelas, the defendant “does not have any means … legal or factual, to resist judgment”, the plaintiff must succeed.
13. As I have said above, and as stated by Bromwich J, the defendant is not necessarily without future recourse. It will be up to him to pursue his rights of objection and the provisions of the TAA which, ultimately, might result in a reduction of his debt. But for the moment there is a debt, and it has been proved, so that judgment will follow. Costs will also follow as a matter of course.
14. The defendant has stated his intention to challenge the debt. In Exhibit 1 he provides some complaint and explanation in relation to the tax assessments (in particular in respect of an amount of $70,000), which may have some substance. In order to allow him to pursue his rights, I will delay the plaintiff’s entitlement to entry of judgment for three weeks. This will enable the defendant to at least file his objections and commence any process that might be available to him under pt IVC of the TAA.
Orders
15. I make the following orders:
(1)Judgment for the plaintiff in the sum of $546,985.46.
(2)The defendant is to pay the plaintiff’s costs of the proceedings.
(3)Judgment is not to be entered prior to 12 August 2024.
| I certify that the preceding fifteen [15] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Elkaim. Associate: Date: 22 July 2024 |
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