Deputy Commissioner of Taxation v Citech Research Pty Ltd

[2009] SADC 140

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DEPUTY COMMISSIONER OF TAXATION v CITECH RESEARCH PTY LTD

[2009] SADC 140

Judgment of Her Honour Judge McIntyre

15 December 2009

TAXES AND DUTIES - INCOME TAX AND RELATED LEGISLATION - GENERAL MATTERS

Plaintiff claims a debt due to the Commonwealth of Australia arising out of a tax related liability. Judgment in default of defendant's attendance at trial. Assessment of the extent of the defendant’s tax related liability and specifically whether that liability includes a general interest charge in circumstances where the Commissioner has not given notice under s8AAZN(2) of the Taxation Administration Act 1954 (the TAA). Use of evidentiary aids under the TAA.

Held: The plaintiff having allocated the administrative overpayment to a running balance account under Section 8AAZD of the TAA as a primary tax debt was not required to give notice under s8AAZN(2) of the TAA and is entitled to judgment for the full amount of the defendant's tax related liability including general interest charge.

District Court Rules 2006 R-234; Taxation Administration Act 1954 s8AAZN(2), s8AAZA, s8AAZF(1), s8AAZN, s8AAZN(2), s8AAZD ; Income Tax Assessments Act 1997 s995-1(1), referred to.
Deputy Commissioner of Taxation v DeAngelis [2008] SADC 103; Deputy Commissioner of Taxation v Smith [2008] NSWDC 219, considered.

DEPUTY COMMISSIONER OF TAXATION v CITECH RESEARCH PTY LTD
[2009] SADC 140

Introduction

1. The Deputy Commissioner of Taxation issued proceedings against Citech Research Pty. Ltd. claiming a debt due to the Commonwealth of Australia arising out of a tax related liability.  Citech filed a defence and other documents but did not attend at the trial.  The Commissioner therefore sought judgment in default of attendance under R234 of the District Court Rules 2006. 

2. Correspondence addressed to Citech’s registered office, principal place of business and its sole director and secretary have been unanswered.[1]  On 24 August 2009 the sole director was declared bankrupt and a Sequestration Order was made against his estate.  The Commissioner caused letters to be sent to the shareholders of the company advising of the trial date and the need to appoint a new director and secretary.  No one has been appointed however the company has not yet been wound up.[2]  It is my view that the Commissioner is entitled to judgment in default of the defendant’s attendance. 

   [1] Exhibit P2

   [2] Exhibit P2 – AJ1

   Issue

3. The sole issue is the extent of the defendant’s tax related liability and specifically whether that liability includes a general interest charge in circumstances where the Commissioner has not given notice under s8AAZN(2) of the Taxation Administration Act 1954 (the TAA).

   Discussion

4. The Commissioner says that Citech is liable to pay the sum of $566,247.83 on account of a running balance account deficit debt (the RBA deficit debt) as defined in s8AAZA of the TAA together with a general interest charge (GIC) under s8AAZF(1) of the TAA.

5. The components of the RBA deficit debt are particularised at paragraph 8 of the Statement of Claim and comprise:

   ·Administrative overpayments under s8AAZN of the TAA.

   ·Administrative penalties under Part IV-25 of schedule 1 of the TAA; and

   ·BAS provisions as defined in s995-1(1) of the Income Tax Assessments Act 1997 (the ITAA 1997).

6. The averments contained in the statement of claim are prima facie evidence of the facts asserted.[3]

   [3] TAA section 255-50

7. At the hearing on 14 December 2009 the plaintiff tendered a certificate under s8AAZJ of the TAA[4] by which the Commissioner certified as follows:

   1.     Citech Research Pty Ltd has the following tax-related liabilities:

   (a)     administrative overpayments in the sum of $266,788.00; and

   (b)     administrative penalties in the sum of $266,313.00;

   (c) general interest charge pursuant to section 8AAZF(1) of the TAA 1953, Part 11A of the TAA 1953 and section 298-25 of Schedule 1 to the TAA 1953, in the sum of $88,732.15.

   2.     As at 14 December 2009, Citech Research Pty Ltd has a tax-related liability in the   sum of $621,833.15 which amount is a debt due to the Commonwealth of Australia    and is payable to the Commissioner of Taxation.

   [4] Exhibit P1

8. The certificate is prima facie evidence of the facts certified.[5] 

   [5] TAA Section 255-45

9. In view of the non-attendance of the defendant at trial the prima facie evidence outlined in the statement of claim and the certificate has not been rebutted and I proceed on that basis.

10. The Commissioner has properly drawn my attention to case law relating to the issue of whether the Commissioner is entitled to claim GIC in the absence of any notice under s8AAZN(2) of the TAA.[6] 

    [6] Deputy Commissioner of Taxation v De Angelis [2008] SADC 103; DCT v. Smith [2008] NSWDC 219

11. Having considered the case law and the legislation, I am satisfied that the RBA provisions provide an alternative method to s8AAZN for the recovery of administrative overpayments and penalties. Section 8AAZD entitles the Commissioner to allocate an administrative overpayment to an RBA as a primary tax debt. That is what has occurred in this matter according to the matters set out in the Commissioner’s statement of claim.

12. Section 8AAZF operates to impose the GIC on the amount of an RBA deficit debt at the end of each day. The balance of the RBA is altered to include the GIC. Accordingly the GIC is imposed on, and itself becomes a component of, the RBA deficit debt. There is no requirement to give notice. GIC is payable by reason of the operation of Section 8AAZF. Section 8AAZN(2) does not have any application in these circumstances.

    Conclusion

13. I conclude that the Commissioner was not required to give notice under s8AAZN(2) and is entitled to judgment for the full amount sought in the certificate including GIC. I therefore award default judgment to the plaintiff in the sum of $621,833.15 plus costs to be agreed or taxed.